Incoming Link's

Links are a very important part of search engine optimisation, you won't show up for many search terms without them. In fact many people (including Google) would say Link popularity is the most important part of search engine optimisation, the best type of link is a one way link to your website from relevant site's.

Three way link exchanges

A very good way to get one way incoming links that carry more weight in the search engines is a 3 way link exchange, if you visit webmaster forums you will find people advertising for this type of link exchange. What's a 3 way a link exchange?

A Three way link exchange is when you find someone that has 2 sites on a closely related subject, this is something a lot of people are starting to do because content websites rank better than ecommerce sites. They set up a blog to promote their corporate website, if for example the corporate site sells Viagra they'd set up a blog that gives lovemaking tips, if you had a related site about (I am being silly now) sex toys you could link to their ecommerce site in return for a link from their blog.

Other ways to get one way links

Write good articles and submit them to article directories, these will then get used by people on their sites. Submit to free web Directories like my Search engine friendly directory.

Anchor Text

When exchanging and building links keep the text relevant to the content of your site and try to use keywords that you want to rank highly for. Use a keyword tool to research which keywords are searched for most often with little competition.

Outbound links

Linking out to high ranking and relevant content will actually improve your pagerank, see if you can find a pr8 site relevant to yours and then link to it if your really lucky they might link back.

Link Exchange Programs

Google says you should avoid link exchange programs, if you do want to use a link exchange program it is better to use one which adds a couple of links a day this looks more natural to the search engines.

Internal Linking You should link to pages on your website in a meaning full way using anchor text with keywords in it in a descriptive manner here's and example is an example SEO Friendly Directory

Thats how to rank better using links.