Lightroom offers three methods to classify your pictures, namely the stars, flags and colors. When I started using Lightroom, I was wondering which one to use and in the subsequent months I went back and forth from one to another. After a trial and error period, I finally found something that worked for me.

After importing, I make a selection of all the pictures I definitely want to delete because they are unusable, such as the blurry ones. I do that by flagging them as rejected, which can be done by clicking on the flag with an X on it. To make it faster, though, I use X key or Ctrl+Down Arrow (Cmd+Down Arrow on Mac). I also keep the Auto Advance selected in the Photo menu. With that option, as soon as you rate, label or flag a picture, Lightroom automatically selects the next one; so that’s easy, I either press X or, if I don’t want to reject the picture, the right arrow to go to the next one. After I’ve gone through all the photos, I just select Photo > Delete Rejected Photos… or press Ctrl+Backspace (Cmd+Backspace on Mac) to remove those rejected photos from Lightroom and I also delete them from the disk, since I know I will never want those pictures back.
I don’t really like to rate pictures, because it seems quite confusing sometimes. I find it difficult to decide whether to give 5 stars (my very best pictures, supposedly) or only 4. Then what about deciding between 3 or 4 stars: 3 are good photos and 4 great ones (though not worthy or 5 stars)? Are 2 stars given to bad pictures and 1 star to those that are awful? But if 1-star pictures really suck, why not delete them? It’s extremely unlikely I’ll ever use them, after all… I might also find a picture is better than another one and so should have a higher rating, but think it’s the other way around at another time.
You get my point: I don’t think ratings are a reliable classification system! But I use them anyway, though in a limited way: what I consider my best pictures get 5 stars and those I think could be great after some improvements in the develop module get 3 stars, just to set them apart from the other photos in the library. That’s it!
Labels are not as confusing as the ratings, unless you have really strong opinions about colors and you are convinced that red is better than green 😉 If you use them, you really have to stick to strict rules; if you start using the same color for multiple meanings, it can quickly become a problem more than a solution. Personally, I currently use only the green label, to identify the pictures that I upload to a web gallery.
What do you prefer? Are you like me and use them all for some specific purpose, or do you stick to one method?
This post is based on Lightroom 4.1; the described interface and functions may be different in other versions.