Data Escrow 101

When, Why, and How Companies Escrow Data

What is Data Escrow?

When you escrow data, you are entrusting it to a secure third party on the condition that it will only be released when certain conditions are met. This is just like an escrow you might experience when purchasing a house, for example, when a bank holds onto your money until the closing documents are all signed and filed.

Escrowing data is a powerful concept because, unlike money, the data itself can be analyzed to confirm that certain conditions are met. This page outlines some of the use cases for data escrow and best practices for doing it right.

Why Use Data Escrow?

Identifying Key Overlaps

Imagine a world where your company and one of its trusted strategic partners have a very simple question: how many customers do we have in common? This may seem like something you should already know, how could you? Each of you has your own customer list that you treat as highly confidential, and despite the strong partnership you would never disclose it to another company.

Well, if both sides are unwilling to share their entire customer list with the other, how can anyone ever run the comparison? This “prisoner’s dilemma” situation results in an outcome that isn’t in anyone’s best interest: both parties choose to keep their data secret and potentially valuable insights are never uncovered.

Data escrow tools like Crossbeam solve this problem. If both companies were able to trust an independent third party who would have no incentive to misuse or mistreat their data, that third party could accept both customer lists, compare them to each other, and share the overlap count with both parties. Problem solved!

That’s just one simple example of what data escrow can do to create value for businesses. Depending on your needs, level of trust, and ecosystem of partners, it could potentially do far, far more.

Buying, Selling, and Investing in Companies

Another common use case for data escrow is when you want to evaluate some key characteristics of a company that you might potentially purchase or invest in. It’s common for companies that are in a sale or fundraising process to be protective of their data, as the parties who do not end up working with them will then have insights that could end up in the hands of competitors.

With the use of data escrow, however, it’s possible for these companies to share information about their customers and sales pipelines on an extremely selective basis. If a potential buyer is interested in how many the target company’s clients are on its key accounts list, for example, it would be possible to surface just that count or list without forcing the target to disclose who all of its customers are or for the buyer to disclose its key accounts.

When Privacy and Accuracy Really Matter

At the end of the day, there are always creative ways to figure out where there are overlaps or synergies among two data sets. Some companies have used techniques like running hashing algorithms on email addresses, sharing only customers whose names start with certain letters, or just caving in and sharing all of their data.

These techniques are somewhat effective but they are rife with risks and problems. The costs associated with of false positives (saying that two pieces of data match when they actually do not) and false negatives (missing cases when there is matching data) are extremely high, representing data leaks and missed opportunities respectively.

If the analysis is important enough to coordinate a joint initiative between parties that involves valuable data sets, the investment to use a third party data escrow service is worth it.

How Data Escrow Works

The steps below outline exactly what's involved in the data escrow process.

Securely Connect Data

The first step to working with a data escrow service is to actually get them your data. Reputable services will be able to offer a process by which your data is securely accessed, encrypted in transit and at rest, and uses existing accounts and authentication methods.

The growth of the API economy has made these secure options abundantly available. Whether it’s using OAuth to connect to the API of your CRM system or using an SSH tunnel to gain read-only access to your company’s database platform, your data escrow provider should be able to securely authenticate and query your data without the need to email spreadsheets, ship USB keys, or send passwords in emails. If you see these asks, head for the hills.

Standardize and Clean Data

Once a data escrow service has securely received your raw data, the next step is to translate it into data sets that actually make business sense. This process often requires your participation, as you’ll be defining key populations inside of your data such as customers, sales opportunities, and leads.

This logic may be as simple as “all the companies in my clients table” or “all the users in my customer support database” but it may also require far more complex logic. Your sales or marketing ops team can likely be a big help in this area.

Analyze Combined Data Points

Once your business logic has been established, what the escrow service is left with is a simple list of companies, opportunities, or people that can be compared with similar lists from your partners. At the intersection of these lists is business value: co-selling opportunities, market sizing studies, lead enrichment data, and intelligence on how to position or package your products.

Matching data can be tricky, however -- between subsidiaries, name changes, people moving between companies, and more, the practice of knowing when two companies are a “match” is a lot more complex than simply comparing names. A good data escrow service will be able to make a reliable match based on multiple criteria extracted from your data sets.

Distribute Results

The final stage of the data escrow process is distributing results. These results come in two distinct but equally important forms: high-level analyses of the overall data set and event streams of changes as they occur.

High-level analyses can give you never-before-seen insights about the magnitude of overlap between your and your partners’ data sets. It tells you which partners have the most customers in common, who has the most knowledge that could help you close your existing sales leads, and it can reveal who in your ecosystem just isn’t worth your time.

Once you’ve internalized that analysis, the day-to-day value comes from changes in the data. Every time a new lead enters your database, the data escrow service can see that lead come in, cross-check it against your partners’ data sets, and make you instantly aware of any overlaps, intelligence, or insights that might exist. This immediate turnaround can help your team qualify, position, and sell to new leads every single day.

Conclusion

Using tools like Crossbeam, companies can escrow data with their partners and discover amazing opportunities and insights that can drive shared growth. But be careful when choosing a provider -- make sure they can connect securely, handle your data properly, and generate the kinds of outputs you need to drive actionable outcomes.