Business leaders must reckon with the American electorate's frustration with capitalism that is driving Sen. Elizabeth Warren's rise in the Democratic primary, Republican pollster Frank Luntz told CNBC on Friday.

"I say to corporate leaders who are watching today: If you don't listen to what Marc [Benioff] said, if you don't find a way to connect to people you serve, your employees and the communities and the customers themselves, then you will face a backlash at the polls on Election Day," Luntz said on "Squawk Box." "And you will rue the day."

Luntz was referencing comments made Thursday by Salesforce founder and co-CEO Marc Benioff, who argued "capitalism, as we know it, is dead."

"And if your orientation is just about making money, I don't think you're going to hang out very long as a CEO or a founder of a company," Benioff said at a TechCrunch conference.

Warren, of Massachusetts, has steadily gained traction in her party's primary contest. She is No. 2 in the national Real Clear Politics polling average, with 24% support. She trails only Joe Biden, who is at 26.2%. But she leads the former vice president in an average of Iowa polls, 23% to 20.3%.

Warren's support has increased as the former Harvard law professor rolled out a series of economic policy proposals that her campaign argues will create "big, structural change." Her signature proposal is a wealth tax, which would tax wealth over $50 million at 2% and wealth over $1 billion at 3%.

Warren's populist economic agenda has alienated some Democratic donors on Wall Street and in big business, who have said they will sit out the general election if she wins the nomination or, possibly, support President Donald Trump.

At the same time, Warren's message is increasingly appealing to Democratic voters. Luntz said his polling shows support for Warren's wealth tax at around 75%, including a "bare majority of Republicans."

"The attitudes and the core principals and priorities of the American people have shifted over the last three years," Luntz said. "We are no longer pro-capitalist, which is why the language and messaging matters so much."

In June, Pew Research Center found Americans still hold a more positive few of capitalism than socialism by a margin of 65% to 42%. Democrats were more likely than Republicans to view both terms favorably, though.

Luntz said people who feel the economy is not working for them feel angry toward those who have "figured out how to do well."

"They are absolutely responding favorably to what Elizabeth Warren is saying, even if the ideas are so extreme," he argued.

Luntz said he considers Warren the odds-on favorite to win the Democratic nomination.

"She's a brilliant debater," Luntz said. "She knows how to begin her statements, how to use facts, how to challenge Donald Trump, how to empathize with the average working-class voter. She's really good right now."