IM CEOs ONLY: Deciding our our firm's direction - lead gen model or retainer?

Hey all!!

So I found 2 guys that want to also open an IM company each with a complimentary set of skills. One guy is a 10 year inside sales expert, and the other is a master at producing high converting business websites. I am coming in from the Internet Marketing side.

We actually have a solid lead gen system up for ourselves, meaning we are processing about 50-70 requests a week and sending out proposals to the ones interested.

We are having an internal discussion based on our viewpoints that revolves around how we should try to close.

Right now since we know we can produce amazing business websites that look great within a cheap budget, we have an 'easy sell' with the websites. We can produce an amazing website that WILL convert for less then $500 in total in most cases. We want to keep the sites simple for now and try to avoid big complex design projects. For now its a "by the numbers game".

So the big question we had yesterday in a meeting is which way to play - Should we work hard on building up and pushing a lead gen model where we will say charge the client for the website, a small admin fee (lets say $500 a month or something small) and then we will 'eat the costs' to generate leads and charge the client based on leads. Basically Pay by Performance model.

OR

Should we work the more usual system of pitching first our quality website, and then one of various packages to get a retainer from the client (SEO+PPC+SOCIAL+REPMANAGEMENT...)

One guy thinks the traditional system is a harder sell, we are not guaranteeing any value, and its a much easier sell when we tell them very little risk since we fork out all the costs they just pay for the leads.

I think that the lead gen model works sometimes but it is not a viable foundation for building a strong business model because it forces us to deliver and overextend too much before we have any guaranteed income.

I say that if the sales guy starts pitching websites + a lead gen model we may be putting ourselves in hot water, because suddenly we have the 'potential' to make good money but until we deliver we have nothing but debt...

Both are good models that have benefits. Neither one of us has enough experience with one or the other to make this decision yet - but the partner who is a web dev expert really feels the lead gen model is the future and we should not be pushing a model that is not so receptive (asking for $xxxx a month to provide services which may or may not increase their business)..

Also just to note, we are good at what we do and whether its retainer or lead gen model we will work hard to bring value to the client so they are happy to stay with us long term...


So thats that! What are your opinions based on your firms??

Since we are able to get steady leads (for now they are mostly lower end leads of small businesses) we need to decide how to process them.

Also tangentially speaking:
What do you find works better, hiring a telemarketing firm to book appointments and have internal team close, or buying your own list and training your own appointment setters... Also what about paying per lead or paying per hour for the appointment setters...

I am excited to see the responses!!