When exchanging anchor text with link partners, how do you guys select the right text? Do you look at what keywords they use to get a high ranking and use that same exact keyword for the link exchange so you can get the familar ranking transferred?
Why do I have the feeling you already know the answer? But to answer your question, yes, people usually choose an anchor with the keywords they want to rank high for.
In terms of keywords to use in links, use keywords that have a high number of users searching for that phrase, but also chose a keyword that has lower competition. You can try and target the attractive keywords, but there will be a lot of competition and you may not rank for them right away...look at this as more a long term goal.
learn how to use google analytics to learn about keywords and what you can rank for vs what is too competative go for the low hanging fruit
research the keywords first... use keywords tool for it... such as: https://adwords.google.com/select/KeywordToolExternal?defaultView=2 and make sure the keywords is relevant to your site.
Links from other websites to your website has more effect on your ranking than: 1. Stand alone use of keywords & meta tags 2. Stand alone use of on page optimization techniques 3. Stand alone use of RSS Feeds These all are increase visitors AND visitor retention.
Whichever keyword you want to use eventually will come back to your decision to select which keyword you want to target and rank high for.
I look at the site where my LE partner will backlink my site from, before I choose the my anchor text for the LE...