They need money to grow, but they also need growth to make money. It’s a tricky conundrum for new businesses to overcome and prove themselves to investors. Product managers are the masters of this jungle. The SaaS market is expected to reach $117.70 billion this year, making it the most significant cloud segment. Steady growth demands more than setting high targets; it requires a smart distribution of resources across all fronts.
There is considerable pressure to grow as investors demand extraordinary returns. The best Saas IPOs of 2018-2020 were able to maintain growth rates above 76%. High-growth companies reward shareholders 5x more than those with medium growth.
Going global is a great opportunity and a significant challenge. All but one of the ‘unicorns’ went global before reaching billion-dollar valuations. SaaS companies preparing for an IPO receive 30% of their global revenue from the European market.
Those are impressive numbers, but it’s not easy to manage:
- Each region has different user expectations, buying behavior, and regulations.
- Tax and compliance requirements differ significantly by country.
- Local market details and cultural nuances become a must.
- The political environment and international relations can have a profound impact on market strategy.
Localization services are vital in this area. A good localization service doesn’t just translate; it adapts your product, marketing, and customer support to fit the cultural, language, and regulatory priorities of the market you’re targeting. Quality localization enables your SaaS product to appeal to local users, thereby reducing acquisition costs and increasing conversion rates.
Money matters even more when you scale. SaaS companies must strike a balance between their spending and allocating sufficient resources to growth projects. They have to balance making money now and market share for later.
Competition intensifies, and customer acquisition costs rise. How can their companies actually grow while spending too much? Localization can provide the answer by enabling companies to enter markets more quickly rather than throwing money at the problem.
Successful SaaS companies understand that entering new markets requires significant resources and comes with associated risks. They invest in quality localization services early in their growth process because they recognize that getting it wrong can be costly and even harm their growth plans.
What Was Broken: Generic Messaging and High Churn in New Markets
When SaaS companies expand into new markets, they often find that their generic marketing efforts fail spectacularly. A one-size-fits-all approach leaves them with a black hole and extremely high customer churn. They lose 12% of their revenue from existing customers every year, and 13% abandon the service entirely.
One reason is that their marketing strategies are ineffective with regional audiences.
Industry research has found that SaaS companies lose 12% of their revenue from existing customers every year. Even worse, 13% of customers abandon the service entirely. That’s a huge pattern. Companies often target the wrong stakeholders with messages that fail to resonate in different markets.
Companies are targeting the wrong people with a message that doesn’t resonate with market needs. For example, a company’s marketing targeted data analysts and business users. Meanwhile, decision-makers in some regions included data engineers and IT professionals. The result was a value proposition that failed to address key pain points.
You spend 5 to 7 times more to acquire a new customer than to retain an existing one. So why are you losing customers? It’s because you aren’t localizing your content. One industry study found that the most important reason for customer churn is poor onboarding. Users often struggle to understand the features and benefits of the product in their market.
Poor localization results in several issues:
- They left after a few days because their expectations had not been met.
- They don’t use the core features of the product.
- They ask about basic functions on support channels.
- They complain that the product isn’t relevant to them.
It gets worse when you find that your message is the same as everyone else’s—like “AI-powered platform,” “uninterrupted integration,” or “scalable solution.” The message won’t stand out in that case. It’ll blend into the noise. And it’ll be even worse when you go international without localizing your message.
Studies of the industry find that voluntary churn accounts for 2.6% of customer losses. However, it increases significantly when you go international without localizing the message to fit the region’s priorities and culture.
The Fix: Smart Localization, Targeted Transcreation, and Workflow Automation
To tackle these localization challenges, a SaaS company needs a three-step strategy. Smart localization adapts your entire product to the needs of the target market. The product should be adjusted for content, design, pricing, and technical aspects (such as right-to-left languages and date formats) and have a local feel for customers in each market. With a localized product, you can enhance the user experience and increase adoption.
Another reason for a high churn rate can be poor marketing, which creates a disconnect between the customer and the brand. Targeted transcreation is one solution to this problem. Transcreation is a distinct approach from translation – a translation specialist takes your content and recreates it, preserving the original meaning and desired emotional impact. It’s a specialized service for marketing materials, and here, a transcreator works as “a combination of writer, artist, and problem solver.” The transcreation process generally involves these steps:
- Preparation. Preparing a creative brief that includes the campaign goal and the brand voice.
- Translation. Producing a rough translation that doesn’t pay attention to style.
- Adaptation. Refining the content for the target market.
Workflow automation is the third part of the equation. It’s necessary for scalability and can be done through continuous localization. Here, the translation is integrated directly into the development workflow, and localization keeps pace with changes, eliminating delays between releases.
Automating the workflow can reduce manual work and improve consistency. When starting a new language, Confirm used Lokalise to localize in eight days. Life360 utilized AI translation, translating half a million words across five languages in one month, and saved up to 80% of the time and costs.
Translation management systems (TMS) are a way to maximize productivity for product managers. They provide maximum efficiency by centralizing assets, automating repetitive tasks, and offering analytics to help you optimize your localization. You can integrate the TMS with content management systems to automatically monitor and pull content for translation.
Localization services become a strategic asset instead of an operational overhead. That allows SaaS companies to scale globally without increasing the costs or delays.
The Results: Lower CAC, Higher LTV, and 3x Conversions
This is how the data plays out: sound localization changes the economics of SaaS. Localized experiences have a significant impact on key metrics after the implementation of localization services. In turn, they improve the bottom line.
SaaS companies tend to have high customer acquisition costs relative to customer lifetime value. According to industry standards, a good LTV: CAC ratio is 3:1. This means that the company needs to generate $3 in revenue for every $1 spent on acquiring a customer. Some companies have LTV: CAC ratios of 9:1 or better.
- Marketing messages that appeal to local cultures.
- Higher conversion rates on existing traffic (from a 2-5% industry average to potential highs of 30% seen in companies like Slack).
- Shorter sales cycles that cut overall acquisition expenses.
Customers of the best-performing websites viewed 18% more pages per visit. Returning customers stayed 58 seconds longer than first-time visitors. This can have a direct impact on revenue. Websites that improved their customers’ experience by 10% saw a 5.4% increase in conversion rates.
Localization creates a compounding effect throughout the customer experience. A company that improved its customer experience saw an 80% increase in conversions, a 25% increase in average order value (AOV), and a 38% decrease in exit rates on key pages.
A product manager who invests in localization services has a clear decision to make. Localized experiences have lower voluntary churn (2.6% of total churn) throughout the customer journey. Moreover, acquiring a new customer is five times more expensive than retaining an existing one.
The top 10% of customers spend 3x more per order than the rest of the customers. For SaaS companies, the best return on investment (ROI) for localization is to focus on these high-value segments.
Conclusion: Fast Growth Needs Smart Localization, Not Just More Spend
Localization transforms a lackluster SaaS company into a market winner. Thoughtful investment in localization services offers a competitive edge that goes beyond simple translation.
For product managers, localization should be viewed as a strategic move, not just a technical checkbox. The data speaks for itself. Companies that offer complete localization services consistently demonstrate better metrics throughout every stage of the customer journey. Localized products fit better with the culture of local users and serve their exact needs.
The ROI of localization is impressive. Customer acquisition costs decrease with higher conversion rates and improved marketing. Users tend to stay longer and spend more when products are relevant to their market. Churn rates drop substantially when messages align with local priorities and address relevant problems.
The divide between localized and non-localized products becomes evident over time. Companies that fail to localize experience high costs and poor employee retention. Companies that partner with professional localization services early establish strong roots to scale in a variety of markets.
Product managers have a chance and a challenge. They can grow big businesses through thoughtful localization plans. The test comes down to finding the right partner and establishing systems that scale with product growth.
SaaS competition is heating up worldwide. Localization isn’t just a nice-to-have — it’s a necessity for business. Companies that localize their products for local markets will outperform those with a one-size-fits-all approach. They’ll establish a stronger market position and give shareholders a better return.
