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Privacy Impacts Purchasing:
Top Ways Companies Can Use Online
Testing and Privacy Seals to Improve
Privacy Practices and Increase Sales


   Carolyn Hodge, Marketing Director, TRUSTe
       Jamie Roche, President, Offermatica
   Tess Koleczek, Chief Privacy Officer, E-LOAN




                                                  1
Agenda
TRUSTe – ROI of Privacy: Earning Trust, Building Business
  Consumer attitude and research around privacy
  Privacy trust builders & eroders

Offermatica – Online Privacy Practices: Stop Guessing and Start Testing
   Explanation of testing & how it works
   Specific client cases regarding security and privacy seals

E-LOAN – Privacy: What’s it worth?
   How to mobilize testing internally
   How to use ROI testing to build privacy budgets and business
   relevance

Q&A


                                                                          2
ROI OF PRIVACY

 EARNING TRUST, BUILDING BUSINESS


                     Carolyn Hodge
                     Director of Marketing




Proprietary and Confidential to TRUSTe
                                             3
ROI OF PRIVACY

Agenda
• Consumer privacy attitudes survey
• ROI case studies
• 2007 Most Trusted Companies for Privacy
• What you can do to influence customer attitudes and behavior.




Proprietary and Confidential to TRUSTe                 4
CONFUSION ON PRIVACY IS WIDESPREAD

    A majority of consumers are confused about the role of a Web
    site’s privacy statement.

    Fifty-three percent of survey respondents believe that a posted
    privacy statement means the organization “will never sell or give
    any of my personal information to anyone else.”




Proprietary and Confidential to TRUSTe                     5
PROTECTIVE ACTIONS NOT PURSUED

• 45 percent have used more than one email address so that one
  is reserved solely for their personal communication
• 43 percent have read privacy policies
• 33 percent have provided email addresses and information that
  would not identify them personally
• 33 percent have changed passwords on a regular basis
• 26 percent have looked for third-party seals or certification




Proprietary and Confidential to TRUSTe                6
TRUST IMPACTS BEHAVIOR

The survey shows that consumer trust online impacts behavior. In
  the past six months:

•   71 percent of respondents have decided against registering or
    making a purchase online because those actions required them
    to provide information that they did not want to divulge.
•   41 percent said that, in the past six months, they have provided
    inaccurate information to Web sites that required personal
    information which respondents did not want to share.




Proprietary and Confidential to TRUSTe                     7
PRIVACY TRUST ERODERS




Proprietary and Confidential to TRUSTe   8
PRIVACY TRUST BUILDERS




 Proprietary and Confidential to TRUSTe   9
LEVERS TO BUILD TRUST
•     Can consumers easily find notice at the time they need?
•     Easy to navigate and read the notice?
•     Provide easy access to account information and ability to
      change it?
•     Can you easily delete or deactivate an account?
•     What are cookie practices and how are they disclosed?
•     Choice for sharing in and out of network?
•     Third party seals present with redress mechanism?
•     Have the sites had any breaches or public incidents in past 12
      months?
•     What is governance structure for privacy?
•     Security for transactions and sensitive information?



    Proprietary and Confidential to TRUSTe                   10
USERS WILLING TO PAY MORE FOR PRIVACY
•   CMU Experimental Study on Privacy Information
•   People were willing to pay about 60 cents more to protect their
    privacy for each $15 item purchased.
•   Low privacy premium 3-5%, High privacy premium 7-10%




Proprietary and Confidential to TRUSTe                     11
VISIBLE & TANGIBLE ASSURANCE PRODUCES
RESULTS




CourseAdvisor.com
       $20,000/week in
       additional revenue




Proprietary and Confidential to TRUSTe   12
Online Privacy Practices:
Stop Guessing and Start Testing
 Jamie Roche, President, Offermatica
What is a Test, Anyway?
   “A/B…N” and “Multivariate”
     Tests allow you to measure the effectiveness of websites, landing
      pages, emails, ads, etc. and/or different elements thereof.

     Two popular types of tests are:
              •      A/B…N Test: Test “Recipe A” vs. “Recipe B” vs. “Recipe C” and so on
              •      Multivariate Test: Test 3 or more different elements of an online
                     marketing campaign.




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.   14
Ways to Test on Your Web Site
    Slots
   • A region on your web page, email, or ad where you can test, target, and
     optimize content for visitors/viewers.
                                         slot                                                     slot              slot




    Offers
     • An offer is content that is                                                                           slot

      displayed in a slot (image,
      html, flash, an entire page or
      even dynamic content)


                                                                                         offer Y                    offer Z

Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.                 15
Case Study #1 - A/B/C/D Landing Page Test
       on Stamps.com
A                                                                                     B




C                                                                                      D




    Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.   16
A/B/C/D landing page test results - Stamps.com
     After running the campaign for 9 days…
     Total lift of the winning landing page (D) was 13%
     All segments had the same winning alternative
     In this case our success metric was just registrations (subscription
       business model)
     When testing in our consumer store, we use conversion to purchase,
       average order value and revenue per visit.



      A
      B
      C
      D




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.   17
Case Study #2 - Multivariate Testing on Home
Page of Audible.com




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.   18
Different Home Page Slots - Audible.com




                                                                                                             Offer
            Main
            Image
                                                                                                             Form

                                                                                                             Trust Logo


                                                                                                             Search Bar

            Product
            Ads
            Testimonial
            s




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.                19
Audible.com Home Page Elements

                                                                         Main
                                                                         Image


                                                                             Offer



                                                                             Form




                                                                          Trust
                                                                          Logo

                                                                             Search
                                                                             Bar

                                                                           Product
                                                                           Ads

                                                                           Testimoni
                                                                           als



Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.   20
Users Received 1 of 8 Recipes




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.   21
Results
           Best Recipe
         - Included privacy seal
         - Had 24% Increase in Engagement




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.   22
The Winning Home Page Layout
                           Control                                                                           Winner




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.            23
Key Results

       Privacy seal had a 7% influence on engagement

             Element                                   Winning Alternative                      Influence on
                                                                                                Engagement
             Main Image                                Alternative 2                            --

             Offer                                     Free AudioBook                           61%
                                                       Download (2)
             Form/No Form                              Form (1)                                 11%

             Trust                                     Trust Logos                              7%

             Search/No Search                          No Search                                --

             Book Banner                               Non Clickable                            --

             Testimonials                              Alternative 2                            4%




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.     24
Multivariate Testing
   Guidelines

            • Select the elements you believe will have the strongest impact
              on the results.
            • You must have at least three elements to test.
            • It is recommended that elements be independent of each other.
              (For example, do not test your layout and content in the same
              test.)
            • Its recommended that each element must have the same
              number of alternatives.
            • For each element, it is recommended to have alternatives that
              are significantly different from each other.




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.   25
Testing Best Practices


   Choose your success metric during campaign design.
   Let campaigns run for a minimum of one week (two weeks is
      preferable).
   If possible, always filter testing results by traffic source.
   Exclude extreme data (i.e. unusually large orders) when evaluating
      revenue measures.
   Consider statistical confidence: What is the likelihood that these results
      will be consistently reproduced?




Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp.   26
Privacy – What’s It Worth?



           Tess Koleczek
        Chief Privacy Officer




        First Draft of Section 1.0 [7/13/04]
 Proprietary & Confidential – E-LOAN, Inc. ©2005
ROI – A New Privacy Concept


 Why measure ROI for privacy?

 •   Privacy = Trust
 •   Trust gets you three things:
      – Customer acquisition
      – Retention throughout the transaction
      – Repeat business
 •   Those three things translate to revenue.
 •   Revenue gets you noticed within your organization.
 •   Seat at the table gives consumer advocacy a voice in the business.




28                  Proprietary & Confidential – E-LOAN, Inc. ©2005
Game Plan: Measuring ROI


 Getting Started: Six Steps to Demonstrating ROI:

 •   Step 1: Obvious – Review your current situation
 •   Step 2: What is your role in the business?
 •   Step 3: Get down to business
 •   Step 4: Test your theory
 •   Step 5: Build some momentum
 •   Step 6: Make it happen




29                 Proprietary & Confidential – E-LOAN, Inc. ©2005
Step 1: Look at the Obvious


 Your Privacy Policy

 •   Is your policy pro-consumer?

 •   Do customers have an opportunity to view it or even know it exists?

 •   Is the policy readable, aka, would my mom get it?

 •   What are you telling people up front? Or do they have to scroll down
     the page in order to find something comforting?




30                 Proprietary & Confidential – E-LOAN, Inc. ©2005
Step 2: How Does Your Company View YOU?


 Privacy Team
 • Are you a participant in key operations & development meetings?
     (where’s your seat at the table?)
 • If not, at what stage do you become involved? (driver or rider?)
 • Can you discuss more than just regulatory requirements and
     privacy? (do you speak the business language?)
 • Are you a business person or a privacy cop?

 Demonstrate that you understand the goals of the business, not just
   your department.




31                Proprietary & Confidential – E-LOAN, Inc. ©2005
Step 3: Dig A Little Deeper


 •   Location of links to privacy policy
 •   Certifications or seals – are they visible?
 •   Pages where you are “selling” your brand
 •   Points of collection
 •   Type of message your company projects
      – Value?
      – Products?
      – Trust?




32                  Proprietary & Confidential – E-LOAN, Inc. ©2005
Step 4:Testing Your Trust Theory - A/B Testing




Images provided by Offermatica
  33                       Proprietary & Confidential – E-LOAN, Inc. ©2005
Examples of Adding Value


                                                         •      Work with Public Relations &
                                                                Marketing

                                                         •      Pick endorsements or
                                                                certifications that add value

                                                         •      Find appropriate locations for
                                                                display




34            Proprietary & Confidential – E-LOAN, Inc. ©2005
Financial Benefits


 •   Measuring success

     – TRUSTe logo alone provided a 3-5% bump in application conversions

     – Newer websites:
         • TRUSTe logo plus other endorsements provided a 20% increase in
           conversion rates!



     – Calculate the benefits:
         • Every “converted” application = $X
         • 2000 apps per day = 100 more conversions = $X,000




35                  Proprietary & Confidential – E-LOAN, Inc. ©2005
Step 5: Prepare to be Heard


 •   Make a map of the current placement of privacy info
     - What is the message being projected?

 •   Identify locations that would benefit from a bump in consumer trust
     & strategically locate info to derive value.
      – Is there “real estate” available for better messaging?
 •   Offer various combinations of “enhancements”
 •   Get the support of business owners – they want to succeed, too.
 •   Estimate the financial gain for the company
      – TRUSTe logo alone provided a 3-5% bump


 •   Request testing to prove your point (be persistent!)


36                   Proprietary & Confidential – E-LOAN, Inc. ©2005
Step 6: Make It Happen


 •   Sell ideas and benefits to business owners – get their support
      - Operations
      - Marketing
      - Customer Service
      - Compliance
      - Legal
 •   Escalate – work the decision-making food chain
 •   Emphasize the bottom line: TRUST = $$




37                  Proprietary & Confidential – E-LOAN, Inc. ©2005
Consumer Advocacy is Good Business


 •   Business reality: Revenue drives most business decisions

 •   Adjust your privacy program to contribute a financial benefit

 •   It takes time & support, so be patient

 •   Use tools already available:
      – TRUSTe seal
      – Other certifications (Verisign, ESRB, etc.)
      – Endorsements (“as seen in WSJ, Forbes, etc.)


 •   Document successes and let executives know your value!


38                  Proprietary & Confidential – E-LOAN, Inc. ©2005
Contact Information
Carolyn Hodge
Director of Marketing
TRUSTe
chodge@truste.org


Jamie Roche
President
Offermatica
jroche@ottodigital.com


Tess Koleczek
Chief Privacy Officer
E-LOAN, Inc.
tessk@eloan.com


                         39

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How to use privacy seals to improve privacy practices and increase sales

  • 1. Privacy Impacts Purchasing: Top Ways Companies Can Use Online Testing and Privacy Seals to Improve Privacy Practices and Increase Sales Carolyn Hodge, Marketing Director, TRUSTe Jamie Roche, President, Offermatica Tess Koleczek, Chief Privacy Officer, E-LOAN 1
  • 2. Agenda TRUSTe – ROI of Privacy: Earning Trust, Building Business Consumer attitude and research around privacy Privacy trust builders & eroders Offermatica – Online Privacy Practices: Stop Guessing and Start Testing Explanation of testing & how it works Specific client cases regarding security and privacy seals E-LOAN – Privacy: What’s it worth? How to mobilize testing internally How to use ROI testing to build privacy budgets and business relevance Q&A 2
  • 3. ROI OF PRIVACY EARNING TRUST, BUILDING BUSINESS Carolyn Hodge Director of Marketing Proprietary and Confidential to TRUSTe 3
  • 4. ROI OF PRIVACY Agenda • Consumer privacy attitudes survey • ROI case studies • 2007 Most Trusted Companies for Privacy • What you can do to influence customer attitudes and behavior. Proprietary and Confidential to TRUSTe 4
  • 5. CONFUSION ON PRIVACY IS WIDESPREAD A majority of consumers are confused about the role of a Web site’s privacy statement. Fifty-three percent of survey respondents believe that a posted privacy statement means the organization “will never sell or give any of my personal information to anyone else.” Proprietary and Confidential to TRUSTe 5
  • 6. PROTECTIVE ACTIONS NOT PURSUED • 45 percent have used more than one email address so that one is reserved solely for their personal communication • 43 percent have read privacy policies • 33 percent have provided email addresses and information that would not identify them personally • 33 percent have changed passwords on a regular basis • 26 percent have looked for third-party seals or certification Proprietary and Confidential to TRUSTe 6
  • 7. TRUST IMPACTS BEHAVIOR The survey shows that consumer trust online impacts behavior. In the past six months: • 71 percent of respondents have decided against registering or making a purchase online because those actions required them to provide information that they did not want to divulge. • 41 percent said that, in the past six months, they have provided inaccurate information to Web sites that required personal information which respondents did not want to share. Proprietary and Confidential to TRUSTe 7
  • 8. PRIVACY TRUST ERODERS Proprietary and Confidential to TRUSTe 8
  • 9. PRIVACY TRUST BUILDERS Proprietary and Confidential to TRUSTe 9
  • 10. LEVERS TO BUILD TRUST • Can consumers easily find notice at the time they need? • Easy to navigate and read the notice? • Provide easy access to account information and ability to change it? • Can you easily delete or deactivate an account? • What are cookie practices and how are they disclosed? • Choice for sharing in and out of network? • Third party seals present with redress mechanism? • Have the sites had any breaches or public incidents in past 12 months? • What is governance structure for privacy? • Security for transactions and sensitive information? Proprietary and Confidential to TRUSTe 10
  • 11. USERS WILLING TO PAY MORE FOR PRIVACY • CMU Experimental Study on Privacy Information • People were willing to pay about 60 cents more to protect their privacy for each $15 item purchased. • Low privacy premium 3-5%, High privacy premium 7-10% Proprietary and Confidential to TRUSTe 11
  • 12. VISIBLE & TANGIBLE ASSURANCE PRODUCES RESULTS CourseAdvisor.com $20,000/week in additional revenue Proprietary and Confidential to TRUSTe 12
  • 13. Online Privacy Practices: Stop Guessing and Start Testing Jamie Roche, President, Offermatica
  • 14. What is a Test, Anyway? “A/B…N” and “Multivariate” Tests allow you to measure the effectiveness of websites, landing pages, emails, ads, etc. and/or different elements thereof. Two popular types of tests are: • A/B…N Test: Test “Recipe A” vs. “Recipe B” vs. “Recipe C” and so on • Multivariate Test: Test 3 or more different elements of an online marketing campaign. Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 14
  • 15. Ways to Test on Your Web Site Slots • A region on your web page, email, or ad where you can test, target, and optimize content for visitors/viewers. slot slot slot Offers • An offer is content that is slot displayed in a slot (image, html, flash, an entire page or even dynamic content) offer Y offer Z Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 15
  • 16. Case Study #1 - A/B/C/D Landing Page Test on Stamps.com A B C D Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 16
  • 17. A/B/C/D landing page test results - Stamps.com After running the campaign for 9 days… Total lift of the winning landing page (D) was 13% All segments had the same winning alternative In this case our success metric was just registrations (subscription business model) When testing in our consumer store, we use conversion to purchase, average order value and revenue per visit. A B C D Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 17
  • 18. Case Study #2 - Multivariate Testing on Home Page of Audible.com Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 18
  • 19. Different Home Page Slots - Audible.com Offer Main Image Form Trust Logo Search Bar Product Ads Testimonial s Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 19
  • 20. Audible.com Home Page Elements Main Image Offer Form Trust Logo Search Bar Product Ads Testimoni als Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 20
  • 21. Users Received 1 of 8 Recipes Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 21
  • 22. Results Best Recipe - Included privacy seal - Had 24% Increase in Engagement Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 22
  • 23. The Winning Home Page Layout Control Winner Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 23
  • 24. Key Results Privacy seal had a 7% influence on engagement Element Winning Alternative Influence on Engagement Main Image Alternative 2 -- Offer Free AudioBook 61% Download (2) Form/No Form Form (1) 11% Trust Trust Logos 7% Search/No Search No Search -- Book Banner Non Clickable -- Testimonials Alternative 2 4% Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 24
  • 25. Multivariate Testing Guidelines • Select the elements you believe will have the strongest impact on the results. • You must have at least three elements to test. • It is recommended that elements be independent of each other. (For example, do not test your layout and content in the same test.) • Its recommended that each element must have the same number of alternatives. • For each element, it is recommended to have alternatives that are significantly different from each other. Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 25
  • 26. Testing Best Practices Choose your success metric during campaign design. Let campaigns run for a minimum of one week (two weeks is preferable). If possible, always filter testing results by traffic source. Exclude extreme data (i.e. unusually large orders) when evaluating revenue measures. Consider statistical confidence: What is the likelihood that these results will be consistently reproduced? Copyright 2006, Offermatica Corp. All rights reserved. | Proprietary and Confidential to Offermatica Corp. 26
  • 27. Privacy – What’s It Worth? Tess Koleczek Chief Privacy Officer First Draft of Section 1.0 [7/13/04] Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 28. ROI – A New Privacy Concept Why measure ROI for privacy? • Privacy = Trust • Trust gets you three things: – Customer acquisition – Retention throughout the transaction – Repeat business • Those three things translate to revenue. • Revenue gets you noticed within your organization. • Seat at the table gives consumer advocacy a voice in the business. 28 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 29. Game Plan: Measuring ROI Getting Started: Six Steps to Demonstrating ROI: • Step 1: Obvious – Review your current situation • Step 2: What is your role in the business? • Step 3: Get down to business • Step 4: Test your theory • Step 5: Build some momentum • Step 6: Make it happen 29 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 30. Step 1: Look at the Obvious Your Privacy Policy • Is your policy pro-consumer? • Do customers have an opportunity to view it or even know it exists? • Is the policy readable, aka, would my mom get it? • What are you telling people up front? Or do they have to scroll down the page in order to find something comforting? 30 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 31. Step 2: How Does Your Company View YOU? Privacy Team • Are you a participant in key operations & development meetings? (where’s your seat at the table?) • If not, at what stage do you become involved? (driver or rider?) • Can you discuss more than just regulatory requirements and privacy? (do you speak the business language?) • Are you a business person or a privacy cop? Demonstrate that you understand the goals of the business, not just your department. 31 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 32. Step 3: Dig A Little Deeper • Location of links to privacy policy • Certifications or seals – are they visible? • Pages where you are “selling” your brand • Points of collection • Type of message your company projects – Value? – Products? – Trust? 32 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 33. Step 4:Testing Your Trust Theory - A/B Testing Images provided by Offermatica 33 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 34. Examples of Adding Value • Work with Public Relations & Marketing • Pick endorsements or certifications that add value • Find appropriate locations for display 34 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 35. Financial Benefits • Measuring success – TRUSTe logo alone provided a 3-5% bump in application conversions – Newer websites: • TRUSTe logo plus other endorsements provided a 20% increase in conversion rates! – Calculate the benefits: • Every “converted” application = $X • 2000 apps per day = 100 more conversions = $X,000 35 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 36. Step 5: Prepare to be Heard • Make a map of the current placement of privacy info - What is the message being projected? • Identify locations that would benefit from a bump in consumer trust & strategically locate info to derive value. – Is there “real estate” available for better messaging? • Offer various combinations of “enhancements” • Get the support of business owners – they want to succeed, too. • Estimate the financial gain for the company – TRUSTe logo alone provided a 3-5% bump • Request testing to prove your point (be persistent!) 36 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 37. Step 6: Make It Happen • Sell ideas and benefits to business owners – get their support - Operations - Marketing - Customer Service - Compliance - Legal • Escalate – work the decision-making food chain • Emphasize the bottom line: TRUST = $$ 37 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 38. Consumer Advocacy is Good Business • Business reality: Revenue drives most business decisions • Adjust your privacy program to contribute a financial benefit • It takes time & support, so be patient • Use tools already available: – TRUSTe seal – Other certifications (Verisign, ESRB, etc.) – Endorsements (“as seen in WSJ, Forbes, etc.) • Document successes and let executives know your value! 38 Proprietary & Confidential – E-LOAN, Inc. ©2005
  • 39. Contact Information Carolyn Hodge Director of Marketing TRUSTe chodge@truste.org Jamie Roche President Offermatica jroche@ottodigital.com Tess Koleczek Chief Privacy Officer E-LOAN, Inc. tessk@eloan.com 39