<PAGE>

                                                                  Exhibit 10.39

October 22, 1999



Paul Lavallee
442 Carpenter Road
Whitinsville, MA  01588

Dear Paul:

I am pleased to offer you the position of President of the Americas for Prime
Response, Inc. (the "Company"), reporting directly to me.  In that role, you
will have complete revenue and P&L responsibility for all sales, professional
services and customer support activities throughout the United States, Canada
and Latin America.

Compensation for the position includes a base salary of $250,000 per year and an
annual incentive compensation equal to 50% of your base salary ($125,000).  You
will be eligible to earn one fourth of that incentive for the remainder of 1999
($31,250).  Half of that ($15,620) will be guaranteed.  Over achievement of $2
million in license revenue for the fourth quarter of 1999 will result in
additional earnings.

In addition, a stock option to purchase 200,000 shares of the Company's common
stock at $5.00 per share will be granted.  As we reviewed, since Prime Response
is legally considered to be in registration, pricing on stock options is to be
calculated at a 10% discount to the low end of the filing range.  The Company is
expected to file for a public listing during the week of November 1.  Final IPO
pricing has yet to be determined and trading pricing is unknown.  With regard to
the pricing difference that we have discussed, we are prepared to price your
stock options at $5.00 per share.

Twenty percent of these stock options (40,000 shares) will be vested
immediately.  The remaining shares (160,000) will be vested according to the
Company stock option standards over a four-year period of time.

General Atlantic Partners, a principal investor and holder of a company board
seat, has agreed to allow your purchase of up to $150,000 of Prime Response
common stock owned by them for $3.00 per share.  This transaction must be
concluded with General Atlantic not later than October 31, 1999.

Furthermore, you will have the opportunity to participate in Prime Response
benefits which include 3 weeks of vacation annually, health and life insurance
and a 401K retirement plan, which includes Company contribution.
<PAGE>

Paul Lavallee
October 22, 1999
Page 2


Should you be terminated without cause, your cash compensation of base salary
and incentive potential (not less than $375,000 as described above) shall
continue for one year.  In addition, the Company will allow you to become vested
in an additional year's worth of stock options to be exercised within one year
of termination.  The same terms shall apply if you elect to terminate in the
event that your position is eliminated, you are offered a position of lesser
responsibility, or if you are not selected for a promotion should a higher
position be created or vacated.

Should you be terminated without cause at a change of control or should you be
offered a position at a change of control that is of lesser responsibility than
the position being offered in this letter, these stock options shall be 100%
vested.  In that event, you will be offered a severance program that continues
your cash compensation of base salary band incentive potential (not less than
$375,000 as described above), as well as all Company paid health and life
insurance for one year.

For purposes of this offer, "cause" condition only occurs if the Company
terminates you after you:  (a) shall have been convicted of any felony
including, but not limited to, a felony involving fraud, theft,
misappropriation, dishonesty, or embezzlement; (b) shall have committed
intentional acts of gross misconduct that materially impairs the goodwill or
business of the Company or cause material damage to its property, goodwill, or
business; or (c) shall have refused to, or willfully failed to, perform his
material duties, provided, however, that no termination under this subparagraph
shall be effective unless you do not cure such refusal or failure to the
Company's satisfaction as soon as practicable after the Company gives you
written notice identifying such refusal or failure (and, in any event, within
thirty (30) calendar days after receipt of such written notice).  No act or
failure to act on the part of you shall be considered "willful" unless it is
done, or omitted to be done, by you in bad faith or without reasonable belief
that this action or omission was in the best interests of the Company.

Should your termination result from your death or disability, you or your estate
can exercise the vested portion of your stock options within the life of the
stock option.

The Company will promptly reimburse you for all reasonable business expenses
incurred by you in connection with and commensurate with the performance of your
duties for the Company, upon substantiation of such business expenses in
accordance with the policies of the Company in effect from time to time.

In recognition of your large physical stature, airline travel one step up from
coach will be provided for all flights over one hour in duration.  Should there
be the opportunity to purchase full fare coach tickets and then participate in
airline upgrade programs in order to secure that step up from coach, you agree
to take every opportunity to do so.

It is recognized that you currently participate in a variety of outside boards
and advisory boards and receive compensation from these activities.  This may
continue providing that it does not interfere with your duties in the Company
and is not considered to be in conflict with the