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It’s the end of 2023 and, rather than contemplating a bright and happy new year, many enterprise localization groups are looking at another year of austerity measures. Through most of 2023 they told us they were either holding steady on spending or cutting it. In September 38% of the global enterprises that we surveyed said there’d be no change in their spending for the next three quarters, while 39% told us they will decrease outlays over that period. As we approach the last days of 2023, we’re hearing that many of them will carry these measures into the new year.
If you face similar budgetary pressures, what can you do to counter them or even convince leadership to invest more? Here’s the rub: By saving a bit on language services now, you may block substantive contributions to revenue in order to save comparatively small expenses.
In this blog post, we discuss two concrete steps you can take to avoid this fate: 1) demonstrating the ROI of current localization and 2) showing the value that additional languages can bring.
Most Useful Content Never Gets Translated
Our analysis has shown that the vast majority of useful content generated every day remains untranslated. Even including free machine translation, just a tiny fraction of 1% of content is ever translated (“The Calculus of Translation”). And if it never leaves the language in which it was created, it cannot be found or used by those who do not speak it. Keeping content locked up has real implications: Our Can’t Read, Won’t Buy research has consistently demonstrated that roughly 75% of potential customers will look elsewhere when they cannot find something in their preferred tongue (“Eternal Truths of the Global Customer Experience”).
To crack open the full value of content, you have no doubt heard for years that you must present localization as an investment or focus on the value that language services provide to the enterprise. But here’s another rub: You need concrete, convincing data to support such claims. If they are to matter, these datapoints should be easy to understand and couched in terms that focus on what matters to senior management.
The ROI of Current Localization
To make the case for current localization, you must demonstrate two things: 1) your language portfolio enables significant revenue and 2) translating your marketing and support content is the most cost-effective way to achieve that revenue. Here, the key word is “enables”: Nobody buys a good or service just because of localization. But without it, you lose opportunities for global growth. While that sounds simple, you must also prove that localization is a better way to achieve international revenue than marketing harder in English or trying to sell it without language support.
We created an example of how you might do this. In it, a fictitious company called AcmeTech derives 44% of its revenue from sales outside of English. In English, it authors roughly two million words per year that appear on its website, in UIs, and in documentation. As a rule of thumb, figure that each of these words costs the enterprise about one dollar to create – that’s two million dollars for its English-language content. By contrast, the company supports 19 additional languages and, on average, translates about 5% of its English content into other languages, ranging from 20% of the whole corpus for German all the way down just 1% for Latvian. Collectively, this amounts to 1.8 million localized words per year, at an average cost of US$0.15/word, or US$270,000 per year.
Let’s put this into a tabular format that could prove useful in making your business case (see the “Language Support Is a Tremendous Revenue Enabler” figure below).
When we compare the revenue each of these expenses enables, what we find is that localization is much more effective than authoring new content in unlocking sales. In fact, in this example, each dollar spent on localization enables 5.8 times as much revenue as one dollar spent in English. Obviously, this ratio will vary by language, but as an aggregate, it shows that the relatively small spend on language services enables significant revenue and that it is a far more effective way to achieve revenue than spending more on English marketing or hoping that customers will be satisfied with just English. In fact, the effectiveness of the localized content suggests that the company should spend less on authoring new content and more on localizing it.
Will these specific figures apply to your situation? No, but by using the approach discussed here, you can determine your own ratios by taking the following steps:
- First, start by determining your sales by language. If you do not have access to this information, find out who does and ask for it. If your organization does not track it, push to gather it or ask for country-level revenue and assign it to the languages that your customers speak to get an estimate.
- Second, figure out your language services costs to calculate the ROI from your spend. This is data you should have readily available if you have a centralized localization function. If it is decentralized, it may take a little more work to find.
- Third, calculate your localization depth as part of this exercise, as showing your efficiency in achieving revenue will be key. However, do not go overboard, as you do not want to suggest that minimal investment leads to maximum reward. Instead, focus on showing how localizing more increases the return in revenue.
If you want to show how your return compares to the populations and the economic opportunity they represent, use business analytics tools such as CSA Research’s “Multilingual Digital Opportunity” series of reports or the free-to-use Economic Atlas of Language to demonstrate the potential and how your spend on particular languages corresponds to ROI.
Show the Incremental Value of Adding Languages
Once you have used your data to make the case that spending on language services is a good investment and the best way to achieve revenue, you can raise the stakes by demonstrating where further investment will pay dividends.
The Economic Atlas of Language took you this far. The next step is to convert its results into data-driven revenue projections. Here, CSA Research’s Global Revenue Forecaster™ can help you forecast the potential revenue that languages can enable and how adding new ones is likely to affect sales in other ones. Based on a comprehensive model of language preference and global economic data, it converts raw economic potential into numbers that reflect your unique situation.
To use it, you provide information about your current and potential languages, the revenue you currently earn around the world, and the countries you are interested in selling into. The Global Revenue Forecaster then makes a projection about the revenue that you can unlock by adding languages and markets, with the “Breakdown of Language” below as an example of actual output. These projections are useful, data-driven targets and statements of potential that you can use to compare options and find the best markets for investment.
The example shown above is for a smaller competitor of our fictitious AcmeTech, one that currently supports a few European markets in English, German, and French. From the Global Revenue Forecaster’s projections, it discovers that adding Spanish and starting sales in Spain and Mexico could potentially increase its revenue by 32%, with similar – but smaller – gains also available through Portuguese in Brazil and Italian in Italy. Based on these results, the company can prioritize its language strategy to maximize revenue. Looking at its previous localization efforts, it can then estimate what it would cost to enable this revenue. Then, the company’s planners can add these countries to a comprehensive business plan for supporting new markets in which language plays a small but vital role.
Start Tracking Language Effectiveness Now
Even if your management is fully supportive of your language strategy – at least for today – start tracking costs and ROI now. If you do this over time, you will have a ready answer if your leadership questions the value of localization later on.
Document what you’ve found: 1) Include the results of your analysis in your annual report to leadership; 2) build a deck on how localization enables revenue in a cost-effective fashion – and keep it current on a quarterly basis; and 3) track trends and show how localization pays off over time.
If every localization team facing calls to trim spending had this sort of information ready in advance, many of them would be ready to make the case for their funding and push back against ill-conceived executive plans that view language as a cost to be cut rather than an enabling factor that unlocks new revenue.
If you need help in building this case or want more information, feel free to contact us. Our team has a proven track record of helping enterprises optimize and improve their language strategies and we have the data you can use to show why language continues to make sense, especially in challenging economic circumstances.