Before the company’s Twitter marketing campaign went viral, Squarespace wasn’t a brand known to many. But the company has experienced rapid growth building a niche in the competitive market for content management solutions/publishing platforms. And it has done it by doing something many others have avoided: charging users.

I spoke with Squarespace CEO Dane Atkinson about the company, its success with a paid business model and what ROI the company’s viral Twitter marketing campaign produced.

What is Squarespace?

Squarespace is online, fully hosted web publishing platform offering a slick, easy-to-use CMS. Customers are able to build, design, and create fully customized websites, blogs and portfolios in a fraction of the time it would normally take them if they were relying on other services or hard coding it themselves. Because of the flexibility of the Squarespace platform, it appeals to both less experienced, less tech-savvy people (who are able to easily accomplish full site buildouts without knowing a line of code) as well as experienced designers and developers (who are able to access and easily manipulate their site’s CSS in order to quickly and more easily create incredibly feature-rich, well designed websites).

On your website, you describe why Squarespace isn’t free. With all of the talk about ‘free’ over the past several years, what led you to avoid the free business model?

We do not aspire to the “free” business model for a variety of reasons. The most important being that we believe that free is almost never actually free. There are, obviously, costs associated with operating a business: providing server space, hiring employees, maintaining an office space, purchasing equipment, providing customer support, etc.

Though many free services may not require direct payments from their customers to cover these expenses, they are often “paying” for them in other ways: perhaps they need to contend with advertising, or deal with minimal or unsatisfactory customer support. Or perhaps their free service requires hours upon hours of their own valuable time to maintain, update and customize. Maybe their site is down often, or their site gets hacked and they have no recourse to deal with it. These are the things that people often forget about when they embark upon these “free” relationships with companies.

We have a very “clean” and transparent relationship with our customers. They pay us a fee every month and we provide them with an excellent product, round the clock customer support and reliability you often don’t find with other hosting providers. When you consider all of the factors mentioned above, our fees often end up being lower than what others are shelling out in hosting, extra bandwidth, professional designers, troubleshooting assistance, and certainly, opportunity costs. None of this is necessary with Squarespace and our customers are happy to pay a monthly fee for their own peace of mind.

Thanks to the economy, more and more companies have started looking to charge their users over the past year. What are some of the key things that companies need to do when building a paid business model?

While there are certainly a wide variety of differences in companies, industries and services, there are a few things that will always remain key factors in building a successful paid business model:

  1. Provide an excellent service
  2. Fulfill a need that is not currently being met (or do it better than everyone else out there)
  3. Focus on customer service
  4. Focus on innovation

Our company has grown organically over the past 6 years with very little marketing or advertising. Though we have expanded our efforts in this area over the past year, we continue to get an astonishing number of “word of mouth” customers or referrals from existing customers. This is in spite of the fact that there are a number of free, direct competitors in our marketplace — which is both inspiring and incredibly humbling.

One interesting thing I noticed is that you offer a 14-day free trial. Some proponents of ‘free’ might suggest that you a freemium model with low thresholds might be better. For an entrepreneur grappling with the best way to offer a free taste of his or her product, what advantages has the free trial model offered you over, say, a freemium model?

We allow customers to try our service, build a site, and then decide whether or not it’s for them. That is in stark contrast to a business that offers a free (sometimes degraded version) of their service to a large swath of their customer base in the hopes that they will one day upgrade to a higher paying account level.

Squarespace customers are not of the mindset that any of our services are free or will remain free. We provide a short window of time in which customers can “test drive” our product, and at the end of that trial period, their choices are very clear cut: remain a valued customer of the company and purchase an account, or not. Happily, our conversion rates speak to the fact that a good chunk of our customers choose to stay.

The market you’re competing in is quite competitive. WordPress and Movable Type are both very popular, both free and can be self-hosted. How have you approached defining your target market and differentiating yourself?

While our competitors offer customers products that offer the possibility of achieving similar final results as Squarespace, the process of getting there is very different. We tend to appeal more to a creative, design-savvy customer base that is willing to pay for our services. And as a website building and CMS tool, we believe there simply is nothing else out there that provides the ease, flexibility, and time savings of Squarespace. While we are, admitedly, behind the competition in visibility right now, this is changing very quickly as more and more people turn to us as a solution.

A lot of people found out about Squarespace through your recent Twitter campaign, which went viral. What metrics, if any, did you employ to track ROI?

We paid close attention to our daily traffic, number of Twitter followers, trial account signups, conversions as well as the number of uses (and popularity of) the Squarespace hashtag on Twitter. Though it was more difficult to measure, we also tried to look at our public awareness perception levels throughout the course of the month.

Overall, did you find that the campaign created more buzz and more business, or primarily buzz?

The campaign created much of both. For a company that is not as well known as some of the other major players, the buzz factor was definitely a nice result of the campaign. We learned some lessons as well, and definitely enjoyed watching the trajectory of the campaign play out over the course of 30 days. We saw significant increases in traffic to our site that month, as well as in trial account signups. Our conversions netted out at about 10% higher than average.

Squarespace is an interesting company. Your founder, Anthony Casalena, was 20 years-old when he started building the product, you’re based in New York, you haven’t raised any venture capital and according to your Inc. 500 profile, you generated over $2m in revenue in 2008. Given the economy, do you think more startups will resemble Squarespace going forward?

I think its hard to say how things will shake out. This recession is certainly putting an unexpected spin on many people’s business models and forcing many to take stock of how they can ensure their business remains viable in this sort of economy. We are grateful that we’ve taken the time to thoughtfully put in place a model for Squarespace that seems to be working well for both our customers, and for the growth of our company.