Most web hosting packages come with some form of free web statistics software like AWStats or Webalizer. But these are merely web statistics – lists, numbers, and if you’re lucky a few graphs. These statistics don’t really tell you anything about how visitors are using your website.
If you’re new to the web and/or can’t afford an expensive web analytics package like WebTrends or Unica, the best place to start is Google Analytics. This free (!) service allows you to gain a wealth of valuable insight into user activity on your site.
Most importantly, with a service like Google Analytics you can derive actionable insights that tell you what part of your site needs to be improved.
Iif you want to learn more about web analytics I highly recommend Avinash Kaushik’s blog. Avinash is an analytics guru at Google and considered one of the chief visionaries in the field.