Peppers and partner Martha Rogers had a great run with the one-to-one approach to marketing for more than 15 years, eventually selling the 1:1 magazine and consulting business to Carlson Marketing Group, which itself has since been sold. Don seems to have disappeared from the scene, though he’s still active on the speaking tour; in fact he’s got a gig coming up in the UK, where he spends a fair amount of time — he’ll be speaking at the Call Centre and Customer Management Expo on September 21.

Now that they’ve milked the one-to-one thing to near-death, preaching customer-centricity in a customer-centric world, I got to wondering how Don is keeping his content fresh in order to justify the $50,000 fee he likes to charge for speaking engagements. That brought me to an article published this week on mycustomer.com, a CRM group operating in the UK, including excerpts from a recent interview they did with him about his newly minted topic: “The critical misconception undermining customer service.”

Don cites results from a study done earlier this year by Convergys which reported that four of five customers believe that customer service standards have deteriorated over the past year, with many communicating their negative brand experiences to friends and family.

Here’s what’s happening according to the Don of marketing: organizations have long been living under the misconception that company value is created by offering differentiated products and services. Whereas the reality is that customers are far more connected to the issue of value creation for companies than products are.

“You can have all the patents and warehouses full of desirable products,” he says, “but the only way you can actually create value, is with a customer. Because if you don’t have a customer, it doesn’t matter how many products you have, you don’t have a business.”

Glad I didn’t pay fifty grand for that nugget of insight. I think old Don may be coasting a little on his one-to-one past.

More than ever before brands are built on trust, not image. Trust is an emotional state, founded not just on the products but on the integrity of companies that produce them, and the CEOs who lead them. In a consumer-driven marketplace, where public trust has been rocked by numerous incidents of corporate greed and situational ethics in a brutal economic recession, even seemingly invincible brands have become volatile.

Such is the case with Toyota, the crown jewel of automotive brands and the standard of quality for so many years, as it deals with repercussions from safety issues relating to reports of involuntary acceleration and now problems with braking systems.  President Akio Toyoda, grandson of the founding father, appears today before the US House Oversight and Government Reform Committee to answer questions about how responsive and forthcoming the company has been in dealing with these issues. It should be interesting to see how the consumer public responds and what kind of damage is done to the brand in this, one of Toyota’s largest and most important markets.

The thing that makes this case more interesting than past public relations crises, like Tylenol and Firestone Tires, is the cultural factor. It has to be excruciating for them. Japanese companies are extremely product-centric, often to the point of arrogance. Once trust in those products has been compromised, it comes down to how well the company can engage with the consumer public and restore faith. In companies where the CEO serves as more a figurehead than a true business leader this becomes exponentially more difficult, especially for Mr. Toyoda who is known to be reclusive by nature. This may well be the most daunting challenge of his career.

Could it be that a changing world has caught up to Toyota, which has failed to adapt to a contracted, customer-centric market environment and lost its competitive dominance? There are a couple of US auto manufacturers who are looking on with great interest; let’s hope they’re learning something.

Drucker would have looked not at the greed on Wall Street, the excessive consumerism and lax lending practices, but at the root causes relative to the design of business organizations, structures, processes, leadership and cultures. He would have concluded that business has largely failed to adapt to changing technologies and market shifts due to a lack of innovation and foresight.

That requires a look back to the fundamental purpose of business: delivering true value to the customer, not just making a profit. “Without the customer there is no business.”

Drucker would remind us of the role culture plays in adapting to changes in the marketplace; that employees cannot be controlled but must be engaged and motivated to a higher purpose than meeting financial objectives. He would suggest that business leaders take a lesson from non-profit organizations in defining that higher purpose.

Drucker warned about the dangers of excessive CEO and management compensation, which puts too much focus on quarterly earnings and shareholder wealth rather than customer satisfaction, encouraging short-term business focus and excessive risk-taking.

More than anything, Drucker would observe with great interest to see if companies have learned from the severe economic correction experienced over the past two years, and whether they are taking necessary steps to adapt to a new market order, other than simply cutting costs.

The time for mere corrective measures is past, he would conclude. What is needed now is a transformation to a new business model built for a redefined market in which the customer rules, not the CEO. It’s a shift from push to pull, from distribution to access, from selling to buying, a re-balancing of the profit/value equation in which marketing is the primary driver, not finance and operations. And the aim of marketing is “to know and understand the customer so well that the product or service fits the need and sells itself.”

[Recommended reading: Harvard Business Review, November 2009]

He asked what my vision was for our fledgling little agency and I told him I believed the Internet was going to empower the customer in a way never seen before, shifting the market dynamic from push to pull. This would require companies to stop obsessing about their own brands and adapt to a more customer-centric business model, focused not on selling but helping customers buy. It also would create the need for a different agency model designed to help companies adapt to a pull marketplace, driven by data insight rather than creative intuition.  The challenge, I told him, was communicating this in a credible way to potential clients.

Dick nodded and said he’d have to give it some thought. He came back a week later and suggested that what we needed was a tagline.

“A tagline?” I asked, thinking his old ad agency tendencies were resurfacing.

“Yes, something very succinct and right to the point.”

“And you have one in mind, I assume.”

“Your customers don’t care.”

“That’s the tagline?” I asked, incredulously. “Don’t you think that might be a little off-putting to our clients?”

“You said it yourself,” he told me. “It’s not about your clients, it’s about their customers. They are too preoccupied dealing with the rigors of their own daily lives to care about your clients’ brands. Your job is to make them care.”

“Well, you’re right about one thing; it’s succinct and right to point.”

We didn’t go with the tagline, but the idea of engaging with customers where they live, on a more personally relevant basis and making them care, has been a fundamental tenant of our marketing methodology.

Dick Damrow passed away earlier this year and I never got the chance to tell him how much I cared, and that he was spot on as usual.

But I delved a little deeper to WOMMA, the “official trade association for word-of-mouth marketing” and I read a book by its President Emeritus, Andy Sernovitz, entitled Word of Mouth Marketing. The organization offers research, best practices, webinars and the promise of measurable ROI. Whoa. They even have a manifesto: “Happy customers are your best advertising.” It seems I’ve heard that before, like a long time ago.

Anyway, they have these four basic rules of word-of-mouth marketing: 1) be interesting; 2) make people happy; 3) earn trust and respect; 4) make it easy. I’m thinking these aren’t rules for word-of-mouth marketing — these are rules of life!

Then there’s the email solicitations from amy@researchandmarkets who is offering me a report titled: “Word of Mouth Marketing Forecast 2007-2011: spending, trends and analysis,” by PQ Media, “the leader in media ecometrics.” It promises definition, measurement, trends and data on industry growth for WOMM.

What I want to know is this: when did customers talking to each other become an industry? When did it become marketing? Let’s get real. Word-of-mouth is not marketing; it’s the market. And it’s been going on since the first skins were traded; now it’s a marketing discipline.

The most recent industry data offered is 2006 when WOMM boasted a total spend of $981 million. It’s starting to take off, according to the report, as more brand marketers are shifting budgets away from traditional media to interactive media and word-of-mouth marketing. I’m there. We need to get people talking about our products.

Cruising through a few websites on word-of-mouth marketing I find some very helpful tips for leveraging social networks and targeting influencers, and I am advised to just be myself. The intent is to initiate and instigate, to influence and percolate, but you can’t fake word-of-mouth; that doesn’t work.

I’m thinking this word-of-mouth marketing is a good thing. But I’m not springing for the three grand.

Marketing is broken because business is broken, within the context of a customer-centric marketplace—still pushing in a pull economy. And marketing has become a function — rather than a driver — of business. This is basically a lapse in the market evolution as the two disciplines have become disconnected, one dragging the other down.

Marketing is trying hard to be customer-centric but is trapped in a business model that was built in a push economy, evolved from the Industrial Age, and driven by a purpose that is no longer aligned with a pull economy. In some cases it’s polar opposite.

Within the confines of the corporate enterprise, marketing has become functionalized, departmentalized, compartmentalized, regimented to a top-down management structure that drives organization focus and performance metrics based on self-serving financial objectives rather than customer serving value objectives.

It is the purpose of business that drives marketing, as a corporate function. If that purpose is profit and return on shareholder value, rather than return on customer value, then we have an interesting dichotomy at play that may be unprecedented, as business is now controlled by the customer in a pull economy. It is the customer that defines brand valuation and quarterly profits.

We need to stand back and take a broader perspective as this is not really a marketing problem; it’s a business problem. It’s a strategic disconnect between marketing and executive management, creating tension between short-term profit and long-term customer value. The CEO is measured on quarterly earnings.

So what does the management guru have to say about this?

That would be Peter Drucker, who proclaimed in The Practice of Management, first published in 1954, that “The purpose of a company is to create and keep a customer. Without the customer there is no company.”

He challenged companies to take a customer-centric point of view: “What is our business? Who is our customer? What does our customer consider valuable?”

His conclusion: “Marketing is the whole business seen from the customer’s point of view.”

And Drucker wasn’t even a marketing guy.

He did believe, however, that there are only two functions in the corporate enterprise that produce results: marketing and innovation. The rest, including management, are costs.

Theodore Levitt, who was a marketing guy, made the point even more succinctly in his book The Marketing Imagination back in 1982.

“Profit is a meaningless statement of the corporate purpose,” he wrote. “Without customers there is no business and no profit.”

“Saying profit is the purpose for business is like saying the purpose of life is to eat. Eating is a prerequisite, not a purpose for life. Profit is a prerequisite for business. To say that profit is the purpose of business is, simply, morally shallow.”

Though he was widely recognized as a marketing guru, business as an institution has not taken heed of his wisdom and foresight, as the purpose of business in most every corporate enterprise is profit—it is deeply embedded in corporate organizations, compensations, operations and cultures. And so we find another lapse, from academic theory to business practice.

In premise, marketing is about customers. In practice, marketing is a function of business, the purpose of which is to make a profit and return value to stockholders. Somewhere along the line marketing lost its way and became a cost. Yet going forward it is marketing that will drive business from the economic abyss into a new, customer-controlled marketplace.

That means marketing and management will have to come together.