How to Build a Business Case for Localization

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Before deciding to enter a new market, you and your business must consider many factors. Market research, infrastructure and logistical support, customer support, setup, local partnerships, and of course, product localization, are essential elements. According to Common Sense Advisory (CSA) research published in 2013, no single market on the planet accounts for more than 22 percent of the world’s economy[1]. This means that any business operating solely in its domestic market is ignoring a substantial part of their total potential market.

Perhaps you’re already operating in a new market with a domestic language product. In either case, product and marketing localization are two of the most important drivers of your market-share growth.

Even if you’re aware of these facts, you still need your organization’s full support in order to localize successfully. So how do you convey this need to the rest of your organization? This article will provide you with the facts and structure you need to build your business case for localization.

Starting with the basics: Why localize?

As stated in CSA’s “Can’t Read, Won’t Buy” study, language is a critical aspect of the buying decision. English reaches only 36 percent of the world’s online and offline buyers.[2] In CSA’s study of 3000 buyers, a full 75% of respondents indicated that when deciding between two similar products, they would buy the product available in their native language.

And more than half of the respondents said they would even prefer lower quality or partially localized content over English or another language they don’t understand. Clearly imperfection in a native language trumps perfection in a foreign language. The world simply does not like to buy something they can’t understand.

Account for a shifting language landscape

Another factor to consider is that more companies are moving headquarters to emerging economy cities. A McKinsey Global Institute report asserts that while developed regions dominate the global company landscape today, this landscape is increasingly shifting toward developing and emerging regions.[3] By 2025, 230 companies are expected to be based in emerging markets, up from 24 in 2000.

Today, 80 percent of the 2,200 large companies in emerging economies are spread across almost 100 cities; by 2025, 80 percent of the 7,000 large companies are likely to be spread across nearly 160 cities.

By the end of the next decade, even more companies will need to conduct business internationally. Consequently, language will become an even larger and more critical obstacle to overcome.

Obtaining executive buy-in

While language and localization matter greatly, presenting a business case and getting buy-in from business executives and decision makers is no easy task. Return on investment is a critical factor, as well as other specific language and localization needs of each business. The more ways you can show decision-makers the numerous opportunities for return on investment as well as various stakeholder perspectives, the more likely you will gain their approval.

Here are some best practices for obtaining executive buy-in for localization:

From an internal business perspective: As corporate headquarters and teams become increasingly spread across languages and geographies in the emerging world, multilingual communication strategy becomes critical to global success. If your company is planning on global expansion into emerging markets in the future, you need a solid localization plan for internal and external corporate communications. This includes a localization plan for global customer experience and post-sales support as well.

From a business-to-business perspective: Corporate procurement teams and user buyers at large companies would no longer be confined to the U.S. or English-speaking regions. If you’re looking to sell to these global firms in the future, all the following need to be in the local language of the global headquarters in each location:

  • Marketing content
  • Sales collateral
  • Product information
  • Customer experience

This has a significant impact on businesses, showing that you have made the effort to make product and service offerings as personalized and convenient as possible—i.e., in their own language.

From a business-to-consumer perspective: There will be ever-increasing revenue streams from emerging and non-domestic markets. According to a 2015 research study, it takes 14 languages to reach 80 percent of audiences online.[4] While this is not a cookie-cutter finding that applies to every product and customer demographic, it sets the premise for further investigation by establishing that trying to sell globally in one language is not the recipe for success.

Customer experience and sales support: These factors are often an afterthought and/or overlooked during localization planning. There is deep value in considering localizing the complete customer experience, including the post-sales experience, rather than only focusing on customer acquisition or product support.

Estimated costs for acquiring new customers range between five and 25 times the cost of retaining existing customers, depending on the industry and other factors. So it’s imperative that you support your customers through every step of the experience so you don’t lose them.

According to the “Can’t Read, Won’t Buy” study, 74 percent of respondents say they are more likely to repurchase the same brand if the after-sales care is in their own language. This preference is strongest among those with less competence in English. However, even 64 percent of those who are most confident in English say they agree on the importance of having customer care in their own language.

Satisfaction with after-sales support directly influences customer retention rate, which is an important consideration when calculating the lifetime value of customers. Ultimately you want to increase revenue in the most cost-effective manner. Including customer experience and sales support in your localization strategy is a sure-fire way to do so.

Return on investment

Finally, the three most important words that every executive decision maker wants to hear: return on investment. Unfortunately there is no one single formula that can be used to calculate localization ROI. In many cases, it’s even hard to attribute increased sales or revenue to localization in a particular region—since many other factors exist. Still, localization does offer significant benefits while determining overall ROI.

Here are some of the ROI highlights to emphasize:

Regulatory requirements: In certain countries and industries, content localization may be a regulatory requirement. In such cases, the ROI question is fairly easy to answer—investing in localization here is the cost of entering the market to conduct any business, rather than the cost to augment existing business.

First mover advantage into a new emerging market: Research has shown that clients prefer to buy from globally recognized brands. Building brand awareness in emerging markets is important, and localizing your customer messaging and advertising material is essential to establishing your brand in a new market.

Increased revenue in new non-domestic regions: Consider the direct measure of increased revenue from additional sales in new non-domestic regions as a result of selling localized products/content. As stated previously, this may be very hard to quantify and attribute directly to localization if there are several factors at play in your global strategy beyond localization.

Nevertheless, surveys conducted by CSA show that localization spend typically accounts for less than 1% of total revenue of many large companies. Yet, overseas revenue as a percentage of total revenue for most global companies is far more than 1%. According to S&P Dow Jones Indices research data for 2014, the percentage of S&P 500 sales from foreign countries has been above 41% since 2003![5]

Non-financial ROI such as customer satisfaction, customer retention or brand awareness has a big impact on the lifetime value of customers. As stated earlier, after-sales support satisfaction influences the customer retention rate, which can be significantly less costly than acquiring new customers. After-sales care and customer experience in a native language renders more satisfied customers, which in turn, leads to increased customer retention.

Define your localization strategy

As more businesses invest in global operations and new product markets, it’s essential for executive board members and decision makers to understand the value and ROI of your localization strategy. Defining a clear strategy that includes localizing products into local languages to drive increased product adoption, and following these best practices will most certainly gain the necessary approval from executive boards and all stakeholders, which, in turn, will foster increased revenues.

About the authorHeadshot_Madhur Kulhara_v2

Madhur Kulhara is a Solution Architect at Lionbridge. With over 13 years of experience in the language services industry, he engages and consults with customers to understand their business problems, and he defines solutions that best leverage Lionbridge capabilities and industry best practices.

 

 

[1] Sargent, B. B., & Ray, R. (2013). Market Entry Decisions – Data Sources and Tools for Strategic Planning. Common Sense Advisory.

[2] DePalma, D.A., Hedge, V., & Stewart, R.G. (2006; 2014). Can’t Read, Won’t Buy. Common Sense Advisory.

[3] Dobbs, R., Remes, J., Smit, S., Manyika, J., Woetzel, J., & Agyenim-Boateng, Y. (2013). Urban World: The Shifting Global Landscape. McKinsey Global Institute.

[4]  Sargent, Finding Revenue in Under- and Over-Served Languages (2015).

[5] Silverblatt, H. (2015, July). Retrieved from http://us.spindices.com/: http://us.spindices.com/documents/research/research-sp-500-2014-global-sales.pdf?force_download=true

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