Gartner's '2012 CEO Survey' revealed that the CRM sector is forecast to grow 7 per cent in 2012 and CRM has moved up from the No 18-ranked technology in 2011.
CEOs cited CRM as their most important area of investment to improve their business over the next five years, it said.
Gartner predicts that by 2014, refusing to communicate with customers via social channels will be as harmful to the relationship as ignoring their emails or phone calls is today.
"The focus on the customer is increasingly important for business leaders, despite times of continued economic uncertainty and government austerity," said Jim Davies, research director at Gartner.
He said effective leaders use technology to strengthen the customer experience regardless of the economic environment, and understand that a new strategy is needed to embrace social and media trends.
As competition intensifies, service providers will either have to grow their own CRM practice to incorporate cloud computing, social CRM, digital media and mobility