In today’s uncertain economic landscape, every department faces tighter budget scrutiny, especially as companies seek to enhance profitability with AI. Localization teams are often the first to experience budget cuts, largely due to a misunderstanding of the true return on investment (ROI) their global initiatives provide. The challenge then lies in clearly defining and communicating the impact of localization, which is often seen as a check-the-box activity rather than a strategic value driver.
Smartling’s latest webinar, featuring Global10x CEO, Kevin O’Donnell, and Smartling Director of Customer Success, Ryan Soos, presented actionable strategies for calculating and conveying the ROI of your localization program.
The Challenge: Proving the ROI of Localization
Proving localization ROI can often feel like an uphill battle. Localization teams often wrestle with being viewed as an expense to the business. “In many organizations, localization is seen as a cost of doing business. It’s almost seen as like the tax of doing business and of selling internationally, rather than a growth enabler,” O’Donnell explained.
Some companies also lack dedicated localization teams and instead nestle localization within other departments, such as marketing, making it difficult for localization “to get the shot it deserves,” at driving value for the business, according to Soos. The value localization can bring is often undervalued or overlooked, as businesses fail to prioritize its potential to drive expansion and revenue.
However, proving localization ROI should be a high priority. Soos emphasized localization is not just a cost driver or an item on a business’s to-do list but a valuable tool that, when utilized accurately, can drive business growth and global reach.
Identifying Critical Data Points and Calculating ROI
Metrics play a crucial role in proving the value of localization. While traditional cost metrics still apply, O’Donnell and Soos suggest aligning localization metrics with the overall business goals. Rather than create a new formula or metric associated with just localization, O’Donnell advises getting acquainted with the metrics company leaders already value and aligning localization efforts with those parameters.
Depending on the department, these metrics can vary; O’Donnel notes that metrics like lifetime value (LTV), customer acquisition cost (CAC), and return on ad spend (ROAS) can help prove localization ROI to marketing leaders, while data like monthly average users (MAU), annual recurring revenue (ARR), and user retention might be more persuasive for product leaders.
O’Donnell and Soos recommend taking note of metrics mentioned in town halls, earnings reports, and organizational goals and using these metrics demonstrate the impact of localization to the company's success in familiar terms. Using such measures can help teams connect their efforts to business objectives and prove the efficiency, cost-saving, and market growth potential of localization.
Effectively Communicating Localization ROI to Leadership
Getting a seat at high-level meetings can be a game-changer for localization teams. By understanding the organization's priorities and aligning efforts with them, localization can become more relevant within the company. O’Donnell and Soos recommend telling a story that builds the narrative of localization’s success to the right people, including initiatives, key accomplishments, actionable plans to deliver value, and efficiency metrics.
For example, creating an international dashboard breaking down metrics per market offers a powerful visual representation of localization's potential impact. Tangible indicators of success might include increased headcount, celebratory emails about the team's achievements, and mentions of localization in town hall meetings. These all offer leaders evidence of localization's strategic worth.
Transitioning from Cost Center Metrics to Growth Metrics
To break free from the stereotype of localization teams as cost centers, try engaging with leadership about their objectives. Offering strategic solutions, establishing the benefits of localization, and becoming allies in their pursuit of goals helps strengthen the case. Keep in mind these changes won't happen overnight, but taking small, visible steps and tracking the direct impact can shift localization teams into occupying the space of growth and value centers.
Localization teams need to advocate for their role in steering the company towards global opportunities, using the same metrics leaders use to drive strategy. By linking localization directly with business objectives and growth metrics, you can convincingly demonstrate their ROI and position localization as a strategic key to unlocking international revenue streams. As advised by O’Donnell and Soos, start small, align with the organization's goals, and don't shy away from showcasing your team’s successes on the global stage.
Want to dive deeper into proving localization ROI? Watch the full webinar.
