Here is how you do it:
1. Put down the keyboard and STEP AWAY FROM THE COMPUTER
2. Identify the Target Goal. On paper or a white board, figure out what goal you are trying to accomplish with your website. The criteria should be S.M.A.R.T. (Specific, Measurable, Attainable, Realistic and Time Bound). "I wanna get rich" or "I wanna sell lots of widgets" doesn't cut it. Get specific.
3. Identify the Target Audience. Based on the above, decide what the focus audience is. If you feel like saying "everyone with money" give yourself a smack and start over. Once again, get specific. If there are 2 types of customers, you will probably require 2 separate sections of your site to deal with them. I suggest starting with one and add the other once you are finished with the first.
4. Identify Your Message. Each target audience can react to many messages, but there is usually one overriding one for each. If there is more than one, choose only one for now. Mixed messages bring mixed results. Focus. The message is usually something simple like "it makes me feel beautiful" or "it solves my backup problems". Whatever it is, identify the message that resonates with your target audience.
5. Identify Traffic Vectors. Now that you know what your target goal is, your message, and your target audience is, you can now figure out what would bring that person to your site. This can include, email, SMS, banner ads, and specific keywords. This is the point you do keyword research. I suggest Wordtracker for a start. Different audiences will use different terms for search. Focus only on the terms that target your audience.
6. Identify The Conversion. What is considered a success? A sale? Filling out a form? Making a phone call? You need to identify what you want your site to do.
7. Write The Copy. This copy should achieve the goals that you have outlined a) it should speak to your target audience in terms they understand b) convey the message you have chosen c) use keywords that are appropriate to the audience and the message and d) convince/lead the visitor to convert.
8. Perform the actions necessary to bring in your traffic vectors - link building, press releases, PPC etc.
9. Track and Chart Results. Watch your logs and conversions, looking for opportunities to maximize your conversions. These opportunities will come from the areas of audience, message, traffic vectors and so forth that you have already identified. If you find you made a bad assumption at this point, go back and fix it.
10. Go back to number one, and start the process over again, this time perhaps choosing a different audience, optimizing for it in a different section of your site.
Getting involved with the details of SEO before you even know what your full business plan is, is a recipe for failure. It's like trying to sit down and write a computer program with no clear idea of what it's going to do. Garbage in, garbage out.
Here is how you do it: