Google Analytics allows you to analyse the traffic (visits) to your blog or website. You can then see which keywords and posts are the most popular, where the traffic is coming from and generally track what’s going on behind the scenes. It’s a free service provided by Google.

You’ll need a Google account to get started, so simply sign up to Google Gmail for a free email account and you can use the same sign-on to use many Google features including Google Analytics. (Just go to "Google Analytics" at http://www.google.com/analytics/ and go through the steps.)
To simplify things, I found these 2 short videos to help you install it.

YouTube Preview Image YouTube Preview Image

You’ll be given a chunk of code to copy and paste into your Wordpress admin area. Go to "Design" and click the "Theme Editor" and then paste into "Footer (footer.php) just before </body>. (Sometimes you’ll find </body> in the header.php. It’s ok to paste it there.)

Click "Update file" to save and now, if you log in to Google Analytics account, you will see that it is collecting data about your blog. This information will prove to be invaluable as each day goes by, as there are many reports to analyse the traffic to your blog, helping you refine your content and where you promote it.

Click here to read more from Google Analytics