A quick checklist on the use and abuse of keywords.
1. Using single words.
Single word keywords tend be highly competitive and very rarely achieve satisfying search results, since in most cases the term is just that - too generic.
2. Using unpopular keywords
It should be obvious, yet it's one of the most common mistakes. The thought "I will be using this phrase because none of my competitors show up when I search for it" will give you a false sense of hope. Ever thought there's a reason why your competitors don't show up? Chances are your site won't either — simply because nobody is searching for those terms. Researching search volumes and popularity are key factors.
3. Not using the right keywords.
By right we mean the most relevant keywords for your target audience, your product, your service. You will agree that targeting the MTV-Generation with the hottest ringtones derived from the newest Hip-Hop tunes might require a slightly different style than selling high-end server components to IT decision makers. Know your audience.
4. Incorrectly assessing a keyword's value or overestimating its importance.
Trying to bump off a list of Wikipedia entries or other highly ranked sites for one particular keyword is most likely not going to happen. Be realistic. Determining the Keyword Effectiveness Index (KEI) is a good start, but also should only serve as a guide. Don't confuse popularity with appropriateness. Keep the user's intent in mind and focus on it.
5. Repetitive use of keywords.
Nothing is worse than poor, unprofessionally written copy. It's distracting. Do not try to overstuff your page with your most important terms over and over, especially when they have absolutely no place within that part of your content. Do not interrupt your content's natural flow by over-using what you think is important.
6. Using them in all the wrong places.
No more META-keyword stuffing. A long time ago, this was considered a very good method, but it isn't anymore. On the contrary, most engines consider it Keyword SPAM. Use sparingly.
See also: Black Hat & White Hat SEO
7. Not using them in the right places.
Another obvious one, but still: They belong in the page title, in your <H> tags, and in your META description. And wherever else their presence makes sense and increases the value of the information you are providing.
8. Not staying up-to-date.
Our language evolves. It changes. Expressions unknown 10 years ago are more than common today. Our environment changes. In return, what's a buzzword today might be out tomorrow. Stay current: everybody hates (out)dated content. If you are selling the hottest new ringtones from the #1 artist, make sure the artist is really #1 in the charts.
9. Not investing enough time in research.
It's a long process, it's tedious, it needs to be repeated in certain intervals and it's probably not what most people consider fun. But it's crucial and absolutely indispensable. Not allocating enough time and resources to this process inevitably results in not doing it properly.
9. Not using keywords at all.
We saved the best for last: Take a look around on the Internet. Look at various pages, and even after quite a while you still have no idea who they are, what they're selling or what they are talking about.