If your blog is hosted with Hostgator or any web host that provides cPanel, there is a web stats software called Awstats that gives you visual data about your website visitors.
Google Analytics is a free tool that collects traffic stats as well, however, it also gives you a lot more marketing data such as visitor behavior. This tool is a must-have if you are serious about blogging and tracking results.
Another reason to install Google Analytics is it allows other people to view your website stats (of course, you control who and what the person can see), which is a great tool for potential buyers to verify your traffic if you ever decide to sell your blog.
Here are a few traffic data that Analytics tracks, as well as how you can best use the data:
Here are steps to add Google Analytics to your WordPress blog.
Head over to http://www.google.com/analytics. If you already have a Google account, simply click on Access Analytics and sign in. If not, click on Sign Up Now to create a new account.

Nothing to do here, but to click on Sign Up

You will be asked to fill out your website information that you want Google Analytics to track. Follow the screenshot below and where applicable, fill in your own site’s information.

Next, copy (Ctrl-C in Windows, or Command-C in Mac) the code provided to you:

Login to your WordPress Dashboard and click on Editor link under Appearance metabox:

Then click on Header (header.php) and paste your Google Analytics code right before the </header> tag:

The reason why you should put your Analytics code in header.php is simple – heaader.php gets included in all pages and posts of your blog so putting your Analytics code there ensures all traffic information is captured.
That’s all. You are done! Google will now start collecting web traffic and visitor behavior information for you. Feel free to explore some of its features and read up on some of the best practices with Analytics.
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