Key performance indicators for localization

Localization has become a key strategic activity for companies looking to expand their global presence and maximize sales. To evaluate the effectiveness of localization, companies rely on key performance indicators (KPIs) that provide valuable insights into business results. In this article, we discuss the importance of KPIs in localization from a business perspective while putting the focus on cost savings, which is an important aspect of greater profitability. By examining a range of KPIs that can be employed by departments responsible for technical documentation and marketing, we demonstrate how companies can measure and optimize their localization strategies in order to be successful in international markets.

There are a wide variety of localization KPIs, which may differ depending on what is important to you. To provide you with an overview, we compiled the six most important KPIs that can be relevant in the area of localization:

1. Sales growth in target markets:
   Measures the sales growth you achieve with localized products or services in target markets. This KPI evaluates the success of localization in the expansion of business opportunities and the development of new customer segments.
2. Market penetration:
   Evaluates the success of localization when entering new markets or growing market share in existing markets. This KPI measures the percentage of the target market reached and the growth of the customer base in specific regions.
3. Cost of customer acquisition:
   Captures the cost at which you acquire new customers in the target markets as a result of your localization efforts. This KPI evaluates the effectiveness of localized marketing, sales, and retention strategies in attracting and converting new customers.
4. Return on investment (ROI):
   Evaluates the financial return on your investment in localization. This KPI compares the costs of localization with the financial gains achieved, taking into account factors such as your increase in sales, accelerated time-to-market, improvement in customer satisfaction, and cost savings from optimized processes.
5. Brand perception and recognition:
   Assesses the impact of localization on brand perception and recognition in your target markets. This KPI measures factors such as brand awareness and brand reputation in your target audiences and provides insight into the effectiveness of localization in building a strong brand presence.
6. Cost savings:
   Measures the cost savings you achieve through effective localization strategies and practices. This KPI evaluates the optimization of localization processes, resource utilization, and the use of technology or automation to reduce costs associated with translation, content adaptation, and market-specific requirements.

The most important and easiest to quantify KPI is the cost savings you as an enterprise can achieve in your localization process.

You can use a variety of strategies and practices to save costs during localization. First, you can increase productivity and reduce the manual effort required by optimizing workflows, using translation management systems, and implementing automation tools. Cost efficiency can also be enhanced through effective vendor management, such as by selecting reliable translation service providers, negotiating favorable pricing terms, and building long-term partnerships.

Another opportunity to save costs is through the reuse of content. Translation memories and terminology databases allow you to reuse previously translated content for similar projects, eliminating the need for complete retranslation and reducing localization costs.

When you invest in robust quality control and error prevention, you ensure that translations are of high quality from the start, minimizing the need for costly proofreading. You can accelerate the translation process, reduce the manual effort required, and improve productivity by using technologies and automation tools such as machine translation (in combination with post-editing), natural language processing, and automatic quality checks.

Centralizing translation management and implementing standardized processes across the organization optimizes resources, reduces duplication, and enables better coordination, resource sharing, and knowledge transfer. By reducing the time it takes to bring products and services to new markets, you can also contribute to cost savings by gaining a competitive advantage, generating revenue sooner, and minimizing your potential loss of sales.

By implementing these strategies and practices, your enterprise can streamline localization processes, improve cost efficiencies, and bring about significant savings while successfully expanding its global reach.

In most companies, translations are mainly taking place in the departments responsible for technical documentation and marketing. While the overall goal of cost savings remains the same, the specific implementation and focus may vary depending on the nature of the department's activities and requirements. In the following, we explain the differences in the application of cost savings in these two areas.

Departments responsible for technical documentation primarily focus on the creation of user manuals, product manuals, technical specifications, and other documents that make it possible to use and understand products and services. Within this framework, you can apply the following cost-saving strategies:

1. Using translation memories:
   The department responsible for technical documentation often produces a large amount of content that can be reused in a variety of documents. Translation memories enable the efficient reuse of previously translated content, which saves you money by reducing the need for new translations.
2. Standardization and templates:
   Implementation of standardized templates and documentation guidelines ensures consistency and streamlines the translation process. By rolling out a consistent structure and terminology, the translation process is made more efficient and the costs associated with inconsistencies and revisions are reduced.
3. Clear and concise text:
   Clear and concise wording in technical documentation helps to minimize ambiguity as well as improve translation accuracy and reduce the potential for errors and misinterpretation. This cuts down on the need for additional clarifications, revisions, and customer support.
4. Collaboration with subject-matter experts:
   Effective collaboration with subject-matter experts during content creation helps to ensure that your texts are correct and clear from the very beginning. You can minimize costly proofreading by involving subject-matter experts and clarifying potential ambiguities and challenges at an early point in the process.

Marketing departments are responsible for matters including the advertisement of products and services in the target markets. This includes the creation of marketing documents, campaigns, websites, and other resources. Here are some ways how your marketing department can save on localization:

1. Terminology and brand consistency:
   Keeping your terminology and brand message consistent across all marketing materials reduces the need for extensive translation and editing. Clear guidelines and comprehensive terminology ensure accurate and consistent translations while saving on proofreading costs.
2. Creating localization-ready content:
   You can also reduce costs by applying localization best practices during content creation. The localization process can be streamlined, and potential problems can be minimized if you design marketing materials with localization in mind, such as by taking cultural nuances into account.
3. Effective use of translation technology:
   You can use translation management systems (TMS) or content management systems (CMS) that can be integrated with translation tools to increase efficiency and save costs. Automated workflows, the use of translation memories, and real-time updates streamline the localization process while reducing the time and effort required for manual reconciliation.
4. Targeted market selection:
   Conducting market research and analysis to identify high-priority target markets helps focus your localization work and make the best use of your resources. Companies can allocate their localization resources more efficiently and avoid unnecessary spending by selecting markets with the highest return on investment.

Localization plays a crucial role in your business success and your expansion into global markets. Businesses can effectively measure and evaluate the impact of their localization measures by implementing key performance indicators (KPIs) tailored to the specific needs of their departments. Sales growth in target markets serves as the primary KPI indicating the effectiveness of product and service localization in generating business opportunities.

However, the preeminent and fundamental KPI is cost savings, which involves the employment of strategies such as increasing translation efficiency, appropriate vendor management, reusing content, streamlining processes, performing quality assurance, making good use of technology, centralizing translation management, accelerating time-to-market, and more. By leveraging these KPIs and continuously improving their localization processes, companies can achieve sustainable growth, increase profitability, and stay one step ahead of the global competition.