Grouping customers by what they do, such as how recently, how often and how much they buy, rather than by who they are.
Behavioral segmentation groups customers by their buying behavior: recency, frequency, order value, products bought, channel and response to price. Firmographic segments say a customer is a mid-sized manufacturer in Ohio; behavioral segments say it orders monthly, has stopped buying one line and only buys on promotion. The second is usually what a sales or retention plan acts on.
Choose the behaviors, set thresholds for each (for example recency under 90 days, six or more orders a year), assign every customer from transaction data, then report count and revenue per segment and how customers move between segments each period.
Of 1,000 customers with $5,000,000 of annual revenue, 180 bought in the last 90 days and placed six or more orders. They are 18% of customers and $3,100,000, or 62%, of revenue.
Thresholds set once and never revisited, and segments built from a single year that miss seasonal buyers. The full guide is behavioral segmentation.