In the world of the global economy and transnational business, when companies seek to enter new markets and attract an international audience, the importance of localization is obvious. Localization is the process of adapting products and services to local languages, cultural and legal norms, allowing companies to connect with local consumers, taking into account their preferences, traditions and norms. The ROI indicator, (return on investment), is an integral element of the international business strategy. In this article, we will look at what the ROI indicator is and its importance for product promotion.
What is localization for?
The idea is to make the product more understandable and accessible to the target audience. This includes translating the interface, content and documentation, as well as adapting the design and functionality. It is important to understand that even the most unique technology can be useless if it is incomprehensible due to language or cultural barriers. You can find out how to translate any website automatic mode in our blog.
Advantages of localization for business:
1) increased profit - лlocalization helps to increase business profitability and sales growth. If your product is completely understandable and accessible to people in their language, then the probability of purchasing it becomes higher.
2) increasing competitiveness - localization helps to increase the number of users of the product, enter undeveloped markets and bypass competitors by adapting products to new languages, taking into account cultural characteristics and local norms.
3) customer loyalty growth - a user-friendly and intuitive product interface or native language content improves the user experience, increasing customer satisfaction and loyalty to the purchased product.
4) improving the brand image - investing in localization creates a positive image of the product, increases user trust and strengthens the position in the market.
Let's imagine a company developing a smart home system with voice control. They have created a product that works seamlessly in English. However, having decided to enter the world market, they faced a problem – their product is not adapted for other languages and cultures, which significantly reduces its attractiveness outside English-speaking countries. Now let's imagine that the same company has invested efforts in localization. They translated the interface and instructions into several languages and adapted the functionality to the specific needs of local users. As a result, it was possible to increase the audience and strengthen its position in the field of information technology.
This example demonstrates the importance of localization to successfully conquer the global market. No matter how widespread the opinion is that English is an international and universal language, according to statistics, billions of people do not read English at all or do not read well enough. The global CSA Research study, which involved 3002 people from 10 countries, confirms that Internet users prefer to make purchase decisions in their native language. This leads to potential customers who are unsure of their reading skills avoiding English-language websites and spending less time visiting them.
Further in the article, we will consider exactly how a business can calculate the ROI indicator.
Calculation of localization ROI
There is an indicator that demonstrates the return on investment - ROI. In fact, this is a formula in which you need to substitute the values of income and costs.
ROI = ((net income – total cost) / total cost* 100%
In the context of localization, ROI helps to assess how effectively the company has invested in the translation and adaptation of content. Usually, data for a certain period or data after the completion of the project are taken for calculation. If the ROI is less than 0%, the company has lost the invested money. At 0%, the company did not earn anything, but it did not go into loss either. When the indicator is above 0%, it means that the company has earned something. A higher percentage means more profit. To calculate ROI, you can use special services, for example Calculator.net , or enter the data and add the formula to Excel.
Challenges in calculating ROI
It would seem that this is a universal tool. Substituting numbers into a formula is a matter of a few seconds, but in fact it's not that simple. Localization is a rather complicated process with many stages. When it comes to a long-term project, it is important to take into account many indirect factors. We cannot rely only on the price of translating one word, we need to take into account the number of employees who will be involved in the project, compare the cost of paying for the work of existing staff and outsourcers. It is also necessary to calculate the cost of project management, the development of new or adaptive design, technical support for new users and a huge number of other difficult-to-predict moments.
Choosing the language and region for localization
The choice of language depends on the product and marketing goals. The first step in calculating the return on investment is to decide which region to work with. Next, you need to estimate the revenue from sales in a potential market. This is not an easy task, and indicators such as the number and standard of living of the population will help in solving it. For example, if there are twice as many smartphone users in a new market, a properly localized version of your app can attract twice as many customers. It is possible and necessary to use data from online tools, such as Google Trends. They allow you to see how popular relevant keywords are in different languages. You can get acquainted with different versions of such tools depending on the region, because Google does not take a leading position everywhere. For example, in Russia, the most popular search engine is Yandex, and in China – Baidu.
Do not neglect advertising
Once you are convinced of the ROI, you need to make sure that the target audience knows that a localized version of your product exists for them. People need to be encouraged to make a choice using advertising and other PR strategies. This can ensure that the return on investment in localization remains positive.
Conclusion
The importance of ROI is that it allows companies to make informed business decisions. Understanding which investments bring the most profit allows you to optimize your budget and resources, focusing on those aspects that bring the most benefit. Specific figures and results can convince stakeholders of the feasibility of further investments. Thus, ROI is an important tool for companies seeking to successfully develop in the global market.
