|This is not an easy task. The first thing you'll need in your personal arsenal is...|
Spend a little time Googling for information on SEO. Be wary of individual company sites (like this one!). Go for the trustworthy authorities like Google Webmaster Guidelines and Search Engine Watch.
If you don't understand the jargon, ask your potential SEO to explain it. You'll find most dodgey operators simply don't have the patience to answer your many questions enough for you to understand what they might be planning to do.
Check out any testimonials for the company you're considering. Contact them yourself, careful to note any relationship with the SEO company other than being a long-standing client. A quick email or simple phone call can save and make you $$$s.
Don't trust any success examples unless you Google them yourself. And don't trust the links to a Google search provided by some companies as they can be twisted! Go to www.google.com.au yourself, and type in the search term. Then see if you can find the client they're bragging about.
Try it with 'Alessi' and look for our client Bristol & Brooks. They've been sitting under the Alessi manufacturers site for a couple of years now, and attracting quite a lot of sales because of it. They're #1 for many other terms, like 'Alessi Australia', 'Alessi Sydney' and of course, 'Designer Gifts'.