Kaley's Knits: A Problem With New Customers

The twelve-month buyer file is in decline.  And yet, when we look at existing buyers (those with a purchase in the past twelve months, and a purchase prior to that, we see this:

If the existing buyer file is in decline, then first-time buyers (customer acquisition) must be in trouble.  Let's take a look.

Wow.

Clearly, something happened to the new customer acquisition program at Kaley's Knits in late spring 2012, or the trajectory of new customers wouldn't look this bad.

Recall our profit and loss statement?

Look at the marketing cost line.  In 2011, nearly $3.0 million was spent on marketing expense.  In 2012, the total is down to $2.7 million.

I would ask Management what happened to the marketing budget?  Did a change in strategy happen in 2012?  In late spring 2012?  Was it in programs (i.e. search) that disproportionately skew to new customers?

A question for you, dear readers.  How does this business continue to grow the top line, when fewer customers are purchasing, and fewer marketing dollars are being invested?  Are there any metrics you'd evaluate to answer this question?