One question we get asked quite a bit when we are out and about speaking at conferences is how do we recomend someone goes about finding a good SEO provider? This question also comes up quite a bit on forums and unfortunately is an extremely hard question to answer.
The main problem with any kind of online marketing provider is that it is very dependant on the relationship between the vendor and the client. It doesn't matter if your SEO is the best in the world, if you dont get on with them you are unlikely to get a good return on your investment. I could give you a list of who the best SEOs are in the UK (in my opinion anyway) but one of the things that makes them so good at what they do is that they know how to pick the clients they are going to work the best with.
Another big factor is what you expect to achieve with your SEO. Some SEO agencies are better equiped to deal with larger, more competitve projects. That is not to say SEO agencies geared to deal with larger project would be unable to take on smaller clients (many of them do) it is just they may prove to be comparitivly expensive. Much the same as a Mercedes garage could service a rusty old banger, you could get the same service for cheaper from your local mechanic.
I would even say you need to be careful when looking for industry experience. This can still be a good factor to think about, someone who has worked in the same or similar industry may well be able to call on that experience to provide a better return on investment but depending on the industry there may also be issues with conflicts of interest.
I've heard a few people saying "well see who comes up top in Google, they should be good!" but again this is not always a good way to go about it. SEO related search space can be understandibly competitive and I know many good SEOs who just cant justify spending the time required to get their own site to the top of Google (if they are busy enough with work they get from client referrals).
The best advise I can give is to trust your instincts. If you can get recomendations from people you will be off to a great start. Past that it's a case of just keep looking, treat it just as you would if you were hiring a new staff member. Other than that be prepared for a bit of trial and error.