What strategy increases the value of a product in the local market through customization for different national tastes and preferences?

While on track for global growth, your business may sooner or later face the question of how to go about implementing localization. The answer may vary from business to business, but one thing for sure is that a localization effort can only succeed if it rests on a clear strategy.

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• What is localization?
• Why localization is important for global business
• Localization will help you enter new markets easily
• Localization will give you a competitive edge
• Localization will increase customer satisfaction
• Localization will increase brand loyalty
• Localization will increase your revenue
• What is a localization strategy?
• Why you may need a localization strategy
• The benefits of a localization strategy
• A localization strategy helps deliver an extraordinary customer experience
• A localization strategy helps ensure fully localized content
• A localization strategy helps you save time and money
• A localization strategy provides a framework for measuring success
• A localization strategy helps you get it right the first time
• What makes a solid localization strategy?
• How to create a localization strategy
• Stage 1: Analysis
• Stage 2: Choice
• Stage 3: Execution
• How to measure the effectiveness of a localization strategy
• Quality KPIs
• Business impact KPIs
• Digital performance KPIs
• Localization strategy examples to learn from
• Airbnb's localization strategy
• Netflix’s localization strategy
• Starbucks’ localization strategy
• Spring-board your business with the right localization strategy
• Which strategy makes sense when pressures are high for local responsiveness but low for cost reductions?
• Which strategy is designed to focus attention on product differences that are important to consumers and that distinguish the company's product from its competitors?
• What strategy is making sense when the firm faces strong pressures for cost reductions and demands for local responsiveness are minimal?
• What strategy applies best to firms that are selling a product that serves universal needs but don't face significant competitors?

The tricky part is that it might be easy to think of localization as a siloed process that only affects your website or app. In reality, localization is a key element of your global business strategy as a whole and should be intrinsically linked to your company's growth plan.

That's why we've put together this guide on how to create the right localization strategy for your business—covering everything from setting clear goals to deciding the workflow to follow and measuring your success along the way.

What is localization?

Localization is the comprehensive process of adapting a product or service to the culture and language of users in a target market. With the internet blurring geographical boundaries, access to products, information, and services has become universal. This globalization of markets, from a business perspective, has created both opportunities and challenges.

On the one hand, there's never been a better time to enter foreign markets with your product or service. On the other hand, the task of making your offering relevant, unique, and tailored to local markets has become more complex than ever. Customers' expectations are higher than ever, and they demand a seamless and personalized experience throughout the customer journey—no matter where they are in the world.

That's where localization comes in. Aiming to adapt a product or service to the cultural and linguistic specifics of a target market, localization goes beyond mere translation. It includes everything from translating your content into the local language to adapting your user interface, payments, images, formatting, and customer support—to name just a few elements—to local preferences, expectations, and conventions.

Why localization is important for global business

That international growth is a good thing is hardly news. After all, a larger customer base usually means more revenue and opportunities for business expansion. However, while the benefits of global expansion are evident, many businesses hesitate to take the plunge due to the perceived risks and complexities involved.

Naturally, there is always a cost to doing business, but it doesn’t have to set you back an arm and a leg. Many companies fear that product localization might cause increased administrative overhead and slow down the release cycle—so they conclude it’s thus just not worth the time. However, if the goal is expanding the global reach of your business, there’s no getting around it.

If you need to get buy-in for localization from upper management or a tangible way to justify the investment, here are just some of the potential benefits that localization can bring:

Localization will help you enter new markets easily

There are many barriers you may face when launching your enterprise in the global marketplace. Legal issues, logistical hurdles, and also cultural and communication challenges can slow you down.

While localization can’t remove all of these speed bumps, it can certainly help you overcome cultural obstacles and help you avoid potential cultural faux pas that could be detrimental to your brand image. With a good localization strategy, your company can gain traction in a new market much more quickly and, if done correctly, you’ll avoid embarrassing translation blunders.

Localization will give you a competitive edge

• Local competitors: Going up against companies that are native to the local market can be tough. Local businesses may be able to gain the trust of an audience much more easily than an outside player. Localizing your product will help level the playing field.
• Global competitors: If your competitors aren’t localizing their product, you will have a clear advantage and be able to get a firm foothold in the new market.

Localization will increase customer satisfaction

Localizing your content will show your commitment to your customers. If you’re addressing your customer’s needs in a way they understand and are comfortable with, they’re more likely to buy your product or service. From user manuals and payment methods to multilingual customer support, localizing all parts of the customer journey will help your customers make a buying decision much more easily.

Localization will increase brand loyalty

If you provide your buyers with a satisfying user experience you will start to gain their trust, which is essential for brand loyalty. Communicating with your users in their native language and tailoring your product will help you gain their trust. Satisfied customers will be loyal to your brand and are likely to stick around to become true advocates of your product.

Localization will increase your revenue

A bigger audience means a huge potential for more revenue, and if you localize your product effectively, you’re bound to see an increase. By optimizing your localization process with a translation management system (TMS), you’ll be sure to get the most out of your translation and localization resources and capitalize on technologies such as machine translation. This will ensure a sizable return on investment that will impress all the stakeholders in your company.

What is a localization strategy?

A localization strategy is a long-term plan that guides a business in adapting its product to the culture and language of different target markets. The ultimate goal of a localization strategy is framing how your company will position itself in a new market so that the transition is as smooth and profitable as possible.

From the set of languages you want to target and the format of your content to the technology you use and the KPIs you measure—your localization strategy should be tailored to the needs of your business. Finally, a localization strategy also needs to consider practical constraints such as time, budget, and resources, which vary from one business to another.

Why you may need a localization strategy

A strategy is to localization what a roadmap is to a journey. It's a plan that outlines where you want to go, how you're going to get there, and what obstacles you might encounter along the way.

And just like with journeys, it's not impossible to get to your destination without a plan—but you're much more likely to encounter problems along the way and arrive at your destination later than you had hoped—if you arrive there at all.

Whether you're just starting to expand your business internationally or you've been operating in multiple markets for years, a localization strategy should be considered integral part of your global business strategy from the start.

The benefits of a localization strategy

Now that you’re aware of both the meaning and importance of a localization strategy, let’s have a closer look at some key benefits of a localization strategy.

A localization strategy helps deliver an extraordinary customer experience

Customer experience is a fine art: It's the result of many factors working together in harmony, from the usability of your product or service across cultures to the quality of your customer support. Localization is a critical piece of the puzzle, as it allows you to tailor your product or service to the specific needs and preferences of your target market.

As such, you shouldn't treat localization as an afterthought—it should be an integral part of your customer experience strategy from day one. This means that your overall growth strategy and your localization strategy should be developed in tandem, with a clear understanding of how the two will work together to achieve your business goals. Only then will you be able to ensure a consistent, cohesive customer experience across all markets.

A localization strategy helps ensure fully localized content

Half-hearted localization efforts will be evident to customers and can do more harm than good. Yet, piecemeal localization—where content is only partially translated or adapted, and the selection of what to localize is made on an ad-hoc basis—is a common trap that companies fall into. While often the result of time or budget constraints, this is frequently also the result of a lack of strategy.

A sound localization strategy will help you avoid this pitfall by ensuring that the selection of content for localization is based on concrete business goals and that the localization process is managed effectively from start to finish. This will result in fully localized content that accurately reflects your brand identity and resonates with your target audience.

A localization strategy helps you save time and money

Developing a localization strategy may require an initial investment of time and resources, but it will save you money in the long run. This is because a well-thought-out plan will help you avoid common mistakes, such as localizing content that won't bring an immediate return on investment, wasting time on manual processes, or avoiding bottlenecks that can slow down your growth.

In short, a localization strategy will help you use your resources more efficiently and get your product to market faster—two essential ingredients for success in today's competitive global landscape.

A localization strategy provides a framework for measuring success

You can't manage what you don't measure. A localization strategy provides a framework for tracking the progress of your localization efforts and measuring the return on investment of your localization spend.

This data can then be used to get buy-in from stakeholders, adjust your localization budget to reduce translation costs, and allocate resources more effectively. In other words, it will inform future decision-making and help you optimize your localization efforts for maximum impact.

A localization strategy helps you get it right the first time

There's no room for trial and error when it comes to localization. In today's global market, customers expect companies to understand their needs and provide a seamless experience—regardless of location. This means that you need to get it right the first time or risk losing customers to your competitors.

A localization strategy will help you understand the impact of cultural differences on customer behavior and identify any potential pain points in the customer journey. This knowledge can then be used to inform your localization decisions, ensuring that your content is culturally relevant and engaging for your target audience.

What makes a solid localization strategy?

The actual components of a localization strategy will vary from one company to another, but there are some key elements that all successful localization strategies have in common:

• It frames localization within the company's overall business strategy: Localization must be closely aligned with the company's business goals. A clear understanding of your overall business growth strategy and how localization can help you realize it is essential for ensuring that your localization efforts are impactful.
• It's data-driven: Data is the foundation of any good localization strategy. Without data, you can't determine which markets to enter, what content to localize, or how to measure the success of your localization efforts.
• It establishes clear objectives and KPIs: Your localization strategy should spell out exactly what you hope to achieve and how you plan to measure success. What are your goals? How will you know if you've achieved them? What KPIs will you use to track progress?
• It defines the target audience: Who is your target audience? What do they need from your content? A comprehensive localization strategy will take into account the cultural nuances that can impact how your target audience perceives and interacts with your content.
• It assigns roles and responsibilities: Who is responsible for localization within your company? Who will manage the process? Who will create and review the translated content? A future-proof localization strategy will assign specific roles and responsibilities to different individuals or teams so that everyone knows their part in the process.
• It outlines the workflow: The best localization strategies provide a detailed roadmap for how the localization process will unfold every time you create new content. From ordering translations and creating a style guide or quality assurance checklist to reviewing the translated content and publishing it, a localization strategy spells out every step of your translation and localization workflow so that there are no surprises.
• It establishes a budget: Localization can be costly, so it's important to establish a budget upfront. A good localization strategy will consider all the potential costs—including translation, review, editing, and publishing—and allocate the budget accordingly.
• It sets timelines: Establishing timelines for each stage of the localization process ensures that content is published in a timely manner and that every team member knows when they need to complete their tasks.
• It includes a review and update process: Avoid the temptation to treat a localization strategy as something static—you should review it and update it on a regular basis to ensure that it remains relevant and effective. As your business grows and expands into new markets, your localization needs will change, so be sure to revisit your strategy as needed.

How to create a localization strategy

Once you know what goes into a good localization strategy, you're ready to start creating your own. The process of creating a localization strategy will be different from one company to another, but it generally involves three stages:

• Analysis (resulting in diagnosis)
• Choice (resulting in guiding policy)
• Execution (resulting in coherent action)

Stage 1: Analysis

This stage is all about understanding your company's needs, goals, and objectives. Market research, target audience analysis, and competitor analysis are all important components of this stage. You'll also need to take a close look at your resources, including your budget, timeline, and team.

The aim of this stage is to gather all the information you need to make informed decisions about localization. That's why considering the business environment and establishing stakeholders' expectations are also important parts of the analysis stage.

Stage 2: Choice

In this stage, you'll use the information gathered in the analysis stage to select the best possible course of action. This stage will involve making decisions about which markets to target, what type of localization to use (e.g., minimum viable or full-scale), what localization technology to use (e.g., the type of translation management system),  and which language service providers to partner with.

Going back to the elements that make a solid localization strategy, this is also the stage where you'll define your KPIs, assign roles and responsibilities, establish a budget, set timelines, and determine how you'll review and update your strategy.

Stage 3: Execution

After you've gathered all the information and made all the necessary decisions, the execution stage puts your localization strategy into action. This stage will involve outlining the workflow—the detailed roadmap we've discussed—and assigning roles and responsibilities.

During execution, the below steps need to occur:

• Internationalization: The process of making your content ready for localization is known as internationalization—it aims to ensure that your content is properly formatted, using the right character encoding, and avoiding hard-coded text in your product.
• Preparing assets for localization: The files that need to be translated—called "assets"—will need gathering, exporting into code repositories, and organizing.
• Setting up the localization environment: Wherever you store your localization files—ideally, a translation management system—you'll need to ensure that it's configured correctly and that all the relevant stakeholders have access.
• Content localization and revision: The actual process of getting a team of linguists to translate your content, and the subsequent review and editing process.
• Deploying the localized content: Once your content is translated and edited, it needs to be published in the appropriate format—on your website, app, or another platform.
• Localization testing and quality assurance (QA): To ensure that your localized content is high-quality, you should give localization testing top priority. This stage can involve running automated tests, as well as manual linguistic and functional testing carried out by native speakers of the target language.

How to measure the effectiveness of a localization strategy

We've mentioned that a data-driven approach is essential to effective localization—and one of the reasons data is so important is that it allows you to measure the effectiveness of your localization strategy.

However, exactly what data to track is another question entirely. Some companies decide to focus on quantitative measures, like website traffic, app downloads, or the number of support incidents. Others choose to focus on more qualitative measures, such as customer satisfaction surveys or Net Promoter Scores.

The most important thing is to establish base values—that is, what your performance indicators looked like before you localized your content. Once you have those baseline values, you can measure the impact of localization by tracking changes over time.

For the purposes of a continuous evaluation of strategy effectiveness, make sure you measure achievable and relevant goals. That might mean breaking your KPIs down into smaller, more manageable goals that can be hit on a quarterly or even monthly basis. Relevancy is critical here—you want to make sure you're measuring the right things and not just things that are easy to measure.

Moreover, for the evaluation to be current, the results must be available in a timely manner. That way, you can course-correct quickly if something isn't working as planned, and adjust your strategy accordingly.

For example, your localization strategy can aim to increase app downloads in a certain region by 10% over three months from a present level of 100 downloads per day. This goal is achievable, relevant, and measurable. If after three months you find that app downloads have only increased to 101 downloads per day, you know that something needs adjusting—maybe your objectives were too ambitious, the market isn't ready, or there's a problem with your localized content.

Here are some of the other most commonly used KPIs for measuring the success of a localization strategy:

Time KPIs

• Time from project kickoff to launch
• Time spent at each step of the localization workflow
• Percentage of on-time deliveries
• Number of missed deadlines
• Average turn-around-time (TAT)
• Idle time (e.g., between creation and assignment or between the delivery of a job and last status change)
• How quickly the content moves through the workflow
• Average editing time per thousand words per workflow step
• Throughput rate—how many words (or other units, e.g., strings) were translated over the number of working days
• Distribution of requests per PM, to make sure they are equally shared

Quality KPIs

• General pass/fail rate
• Average quality scoring for each provider/vendor per language, domain, etc.
• Amount of edits in the revision step
• Changes introduced between workflow steps
• Click-throughs on links
• Number of support requests or queries
• Number of end-user reports for errors or issues in translated content
• MT output quality
• Number of ignored QA warnings

Cost KPIs

• Money spent per business unit, provider, project, language, workflow step, etc.
• How much is paid in hours/words
• Amount of words translated per provider
• Average price per word
• Average price per hour
• Project management spending
• Budget compliance, i.e., spending vs budget
• Cost per metadata
• Most translated languages
• Top submitters
• Software costs
• Training costs

Business impact KPIs

• Overall revenue
• Monthly sales growth
• Average revenue per new customer
• New customers acquired
• Customer lifetime value
• Retention and churn rates
• International market growth rate
• Relative market share
• Customer satisfaction improvement over time
• Net promoter score (NPS)
• Customer effort score (CES)
• Customer satisfaction (CSAT)
• Sentiment analysis

Digital performance KPIs

• Organic traffic
• Number of unique visits
• Number of page views
• Average time on page
• Bounce rates on localized pages
• Site rankings (SEO)
• Social media engagement rate (number of interactions, shares per post, virality rate, audience growth rate, number of brand mentions, etc.)
• Conversion rate (sales, downloads, etc.)
• Click-through rate
• Number of transactions
• Number of new leads

Localization strategy examples to learn from

While there's no one-size-fits-all solution to localization, there are certain best practices that all successful strategies have in common. To get an idea of what a good localization strategy may look like in action, let's take a look at 3 localization examples that speak for themselves.

Airbnb's localization strategy

The 2007 launch of Airbnb was nothing short of a revolution in the travel industry. The company has since grown to become one of the world's most valuable multinational companies, with a valuation of over $62B.

A big part of Airbnb's success is due to how it approached localization from the very beginning. The company realized early on that in order to succeed in foreign markets, it would need to offer its platform in multiple languages. Salvatore Giammarresi, Head of Localization at Airbnb, has said in a recent interview that Airbnb's users, particularly those traveling cross-border, were by definition "on the move going through two or more locales. In many cases, there might also be a linguistic and cultural mismatch between host and guest."

As a result, localization was essential to the company's strategy from day one. Airbnb strives "to localize and internationalize everything that Airbnb creates, at scale, at a high quality, on time, and within budget" and "align [the localization] team with the values and business goals of the company."

This has allowed Airbnb to scale its platform quickly and efficiently to new markets, without sacrificing quality or customer experience. Every aspect of the platform, from the user interface to customer support, is available in multiple languages—even the company's logo changes to reflect local preferences (e.g. using a heart symbol instead of the letter A in countries where that would be more meaningful).

In addition to translating its platform, Airbnb also creates localized content to appeal to users in different markets. This includes things like blog posts about popular travel destinations, as well as user-generated content like reviews and descriptions of listings.

Netflix’s localization strategy

Netflix is another company that has localization at the heart of its business model. The streaming giant is available in 190 countries and offers its content in over 37 languages to over 200 million people around the world.

Much like Airbnb, Netflix faced the challenge of how to offer a consistent user experience across multiple languages and cultures. With the goal of creating a streaming empire, Netflix couldn't afford to let language barriers get in the way.

Originally founded as a DVD rental service, Netflix realized early on the potential of streaming video content online. In 2007, the company started offering its streaming services internationally with a limited selection of movies and TV shows.

What allowed Netflix to succeed where other companies had failed was its focus on localization. Some key components of Netflix's localization strategy include:

• Not attempting to localize multiple regions at once: Having set up in 130 countries in the space of just three years, Netflix realized that it would be impossible to localize its content for every single market all at once. Instead, it took a more strategic approach, focusing on specific regions and expanding from there. This allows them to really focus their attention on creating a great user experience for each market without spreading themselves too thin.
• Using customer data to localize content: Netflix has a huge amount of data on its users, which it uses to improve the customer experience. This data is also used to inform localization decisions, such as which languages to offer content in and what type of content will be most popular in each market. This focus on data has allowed Netflix to create a localization strategy that is tailored to the needs of each individual market.
• Customizing the offer for each market: In order to appeal to local audiences, Netflix doesn't just offer its content in different languages—it also tailors the content itself to reflect local preferences. The content you can watch on Netflix in different countries varies depending on what is popular in that market.
• Investing in customer experience: Another important part of Netflix's localization strategy is its focus on customer experience. The company offers customer support in multiple languages and has country-specific social media accounts to engage with users around the world. It also ensures that the platform is easy to navigate, that users can find what they're looking for, and that they have a positive experience using the service.
• Creating original content with a global appeal: In addition to its vast library of licensed content, Netflix has also invested heavily in creating its own original programming. This includes shows like Squid Game, a South Korean drama, Lupin, a French mystery thriller series, or La Casa de Papel, a Spanish heist drama. This local-to-global strategy has been successful in attracting new users and keeping existing ones engaged.

Starbucks’ localization strategy

Starbucks is another company that has successfully used localization to expand its reach. The coffee chain now has over 30,000 stores in more than 80 countries around the world.

When Starbucks first started expanding internationally, it faced the challenge of maintaining its brand identity while still appealing to local tastes. In order to do this, Starbucks adopted a localization strategy that involved:

• Dedicated design centers: Because Japan, New Zealand, and China all have very different design aesthetics and building needs, Starbucks has opened 18 design centers around the world to make sure that its stores fit in with local tastes. From community tables that foster conversation in cultures where that is the norm to ensuring that the biking community has ease of access in areas where that is popular, these design centers help Starbucks create a unique customer experience in each market.
• Tailoring the menu to local preferences: While Starbucks' core offerings of coffee, tea, and pastries are available in all markets, the company also offers localized food and drink items that reflect local tastes and preferences. For example, halal food is available in stores in countries with large Muslim populations, and bubble tea is offered in Asian markets.
• Replicating the in-store experience across markets: One of the most important aspects of Starbucks' localization strategy is its focus on replicating the in-store experience for customers no matter where they are in the world. This includes everything from the way stores are designed and decorated, to how employees are trained to interact with customers, to writing names on cups. By creating a consistent customer experience, Starbucks has been able to build a loyal following of customers around the world.
• Drink names in English (or Italian): For customers to feel that the in-store experience is consistent no matter where they are, Starbucks writes drink names in English (or Italian, when English has already adopted the Italian drink name). Cappuccino, espresso, flat white, and so on, are all written in English on Starbucks menus and blackboards no matter what country the customer is in. This small detail helps create a sense of familiarity for customers that makes them feel comfortable and welcome in any Starbucks store.
• A mixture of wholly-owned subsidiaries, joint ventures, and licensed stores: When Starbucks wants quick expansion in a particular country, it will open a licensed store that is managed by a local partner. However, in markets where it wants more control over the customer experience, it will open a wholly-owned subsidiary or joint venture. This tactic has allowed Starbucks to maintain a high level of control over its brand while still expanding rapidly into new markets.

Spring-board your business with the right localization strategy

This guide has walked you through everything you need to know about creating an effective localization strategy. By setting achievable, relevant goals, measuring your progress against those goals, and understanding the importance of tailoring your content and message to local markets, you can make sure that your products and services are appealing to customers in every corner of the globe.

Last updated on September 25, 2022.

Which strategy makes sense when pressures are high for local responsiveness but low for cost reductions?

A transnational strategy makes sense when cost pressures are intense, and simultaneously, so are pressures for local responsiveness.

Which strategy is designed to focus attention on product differences that are important to consumers and that distinguish the company's product from its competitors?

Differentiation strategy is a type of marketing strategy aimed at distinguishing a product or service from similar products on the market offered by competitors. Differentiation strategy is developed by businesses to provide something unique and distinct from the other offerings to ensure a competitive edge.

What strategy is making sense when the firm faces strong pressures for cost reductions and demands for local responsiveness are minimal?

Which strategy makes most sense when there are strong pressures for cost reductions and minimal demands for local responsiveness? Global standardization strategy.

What strategy applies best to firms that are selling a product that serves universal needs but don't face significant competitors?

The distinguishing feature of many firms pursuing an international strategy is that they are selling a product that serves universal needs, but they do not face significant competitors, and thus unlike firms pursuing a global standardization strategy, they are not confronted with pressures to reduce their cost ...

Which strategy makes sense when pressures are high for local responsiveness but low for cost reductions?

Which strategy should firms pursue when they are trying to simultaneously achieve low costs through location economies economies of scale and learning effects?

What is a global standardization strategy?

What strategy applies best to firms that are selling a product that serves universal needs but don't face significant competitors?