Google Analytics is a free Google service which allows the webmasters and web site administrators to monitor their web sites’ traffic and conversion ratio. Magento supports two types of tracking:

• Page View Tracking – Lists the origin from which your web store visitors linked to your store.
• E-commerce Tracking – Lists the customers that make purchases and what they buy.

First you need to sign up at http://www.google.com/analytics/sign_up.html. You will receive a Google Analytics account number. Write it down since you will need it for the Magento configuration.

Now, you need to configure the Google Analytics tracking in your Magento store. Open the your Admin area and navigate to System -> Configuration -> Sales -> Google API and expand the Google Analytics section.

Pick the Yes option from the Enable drop-down menu. Enter the Google Analytics account number in the Account number field and click on the Save Config button. That’s it, the Google Analytics code is added to your site.