Targeting the Right Terms

Targeting the Right Terms
Targeting the best possible terms is of critical importance. This encompasses more than merely measuring traffic levels and choosing the highest trafficked terms. An intelligent process for keyword selection will measure each of the following:
Conversion Rate - the percent of users searching with the term/phrase that converts (click an ad, buy a product, complete a transaction, etc.)
Predicted Traffic - An estimate of how many users will be searching for the given term/phrase each month
Value per Customer - An average amount of revenue earned per customer using the term or phrase to search - comparing big-ticket search terms vs. smaller ones.
Keyword Competition - A rough measurement of the competitive environment and the level of difficulty for the given term/phrase. This is typically measured by metrics that include the number of competitors, the strength of those competitors' links, and the financial motivation to be in the sector. SEOmoz's Keyword Difficulty Tool can assist in this process.
Once you've analyzed each of these elements, you can make effective decisions about the terms and phrases to target. When starting a new site, it's highly recommended to target only one or possibly two unique phrases on a single page. Although it is possible to optimize for more phrases and terms, it's generally best to keep separate terms on separate pages, as you can provide individualized information for each in this manner. As websites grow and mature, gaining links and legitimacy with the engines, targeting multiple terms per page becomes more feasible.

Source: seomoz.org