Let me try and respond to Chicago's points and add a little history as to why and how we do what we do w/our site and others.
We primarily learned off of our site. It was set up in '96 and via dumb luck our url is keyword1-keyword2.com, the #1 phrase for our industry.
During early 2003, despite not doing anything on our site we recognized our site was working well and becoming a major source of leads and sales for our local/regional business. It was approaching traditional print and other sources as a major source for leads.
We had Zero programming or web experience. We learned that google depended on backlinks, learned about them and started adding backlinks galore. We learned about this in forums.
All our efforts were on industry phrases...not geo/industry phrases.
We started looking at all aspects of this and started our log analysis files very closely.
Over time we saw that geo/industry phrases converted at far better rates than straight industry phrases.
We were fortunate (and worked hard) to obtain quite a bit of 1st page rankings for the industry. (The industry would be rated as medium competitive).
We started on geo phrases later as we learned of their importance.
The site is set up with address and contact information on the global footers.
The title(global header) provides our name with the geo region area Washington DC Virginia and Maryland.
We left all of that as is.
Currently, on my business site we sprinkle geo phrases throughout the content on all relevant pages that describe our services. We have added pages that reflect different ways visitors search for the service. The volume of phrases is surprisingly high and diverse. We have added industry phrases over time using keyword phrase tools, and also by scrutinizing competitor sites for their content and running searches on those phrases. Frankly we have copied phrases, tested them to see if they draw traffic, and if they work tried to provide anchor text bls for those phrases to grow in the engines.
Adding geo phrases within the content has worked sufficiently to date to appear high for local/industry phrases.
If the competition is more fierce we need to step up the effort in a variety of ways.
One thing to consider is that the 3 major engines treat geo ranking differently and phraseology differently.
For instance, Y and MSN pick up more from the URL and interior page names than does Google. They also pick up more from Meta tags...so I still focus on them even as google has reduced their importance. Similarly, google is more refined to pick up stemming (turning a singular into a plural and vice versa). Y and MSN seem to require more focus on that.
I make sure the content has some mention of both the full regional names and initials. So at least once on each page for our area I'll try to get in all geo descriptions on each page (i.e. Maryland, MD, Virginia, VA, Washington DC, Washington, and DC.) It might make the content a bit cumbersome and all the descriptions are not on every page...but I've got to have them for every important phrase.
Since this site covers each of three major regions I've dedicated regional pages with descriptions of the services applied in each jurisdiction. It is a little bit of a stretch but it works well. In those pages I've got each geo description covered in meta tags, headers, within the content, I have some localized addresses and of course in the footer. That has been a big advantage.
For a chain I want an individual page for each location. That covers a lot. I add some slight description on each one with of course the address.
While the service is regional we attract traffic with the searches that give town name/service.
We have tried to attack that in the following ways.
Instead of using Mapquest or some other service for directions we include written driving directions from all directions, North, South, East and West. We start the directions with a group of town names. Consequently we can pick up service/town names search traffic. (there are some nice tools that allow you to pick up all sorts of town names in a radius of your business, attach service/business phrases to them and apply them to ppc).
Adding town names to the service gives additional valuable coverage. I'm surprised at the number of searches that come in w/town names.
Of importance we work ppc hard with regional phrases and also cover industry phrases in google with a geographic approach.
Of interest, most of our traffic comes during work hours from peoples places of work. We have only recently found that a fair number of larger businesses have servers outside of the region. This means that our ppc for the regional phrases is missing.
We are currently experimenting with this to stretch our visibility. Fortunately our competitors are also missing on this basis.
Finally, as much as high serps rankings are importance we find 2 other areas that are also vitally important; PPC and highly topical links, either industry related, locally related or optimally both.
Both PPC and related links work extremely well. On the other hand we see little value to date from Local on any of the engines or our investment in YP on the web or some other aggregators.
This is an ongoing process in which we are constantly learning, evolving, changing, and updating. On top of that the engines change which will effect strategies. If any aggregators gain widespread use that will dramatically effect these efforts.
None of the sites I've worked on have yet to face brutal competition for local phraseology.
When starting fresh I focus on bls for the major industry phrase(s) and the relevant geo descriptions. I've found far better conversion statistics from service/geo descriptions than from the best industry phrases alone. I work hard on bls with the geo names in the phrases. That also means spreading the geo phrases around. For instance my business covers Virginia, Maryland and DC. Anchor text for a phrase for keyword1 keyword2 Virginia carries more weight than the keyword phrase all 3 regions or with all 3 initials.
I've spread them around w/both...but that is a lot of variations on anchor text...so that is difficult. On the other hand it is difficult for all competitors also so it just takes work and ingenuity and effort ( and money).
Chicago: How do you see the intersection of a business working on all this and an SEM/SEO provider?