It's important to track keyword rankings, but obsessing over single keywords is usually a waste of time. Sure it's nice to rank #1, but that's not where most of the money is made. 50-80% of your traffic comes from long-tail keywords that you aren't tracking anyway.
What's more important in SEO than a #1 ranking? How about:
• Search visibility
• Click through rate
If you're going to track keywords (and you should) track them in aggregate using keyword indexes so that you can judge the health of your entire site against themes and concepts. If you sell life jackets, group all your 'life jacket' keywords together and track their rise and fall over time as a group.
Down the road, instead of report keyword rankings to your client, report on overall keyword health, traffic, links and conversions - because these are the metrics that actually move businesses.
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