The success of your blog depends on your visitors – if they like you content they will stay on your blog else move on to some another blog.
In all, Traffic Sources are classified into 3 types:
Direct Traffic: You can’t expect this traffic to more than other two type unless your blog is as popular as Google or Facebook which most of the user visit by directly typing the url or by clicking on their bookmarks.
Note: Direct Traffic can be increased only by a huge promotion, by advertising it, or having great content.
Referring Sites Traffic: This is the second way where traffic came to your blog, a referring site is one which has a link to your site. To increase referring sites traffic best idea is to write unique content and tutorial, as when other site copies your article, they provide you a referring link. Launching free goodies like software, plugins etc are also some good options that you may try.
Tip: Having referral sites with good PR is good for your PR also.
Search Engine Traffic: Of all the traffic, this is the traffic on which you have to concentrate the most. This traffic , also refered to as ‘organic’ traffic, comes from various search engine. Your main aim should be to increase the percentage of this traffic. A higher organic traffic also means a higher AdSense or blog revenue, generally speaking!
Tip: Write unique content, write 1 post daily, submit site map, add your site link to different search engines.
That was just an overview of Traffic source. Now how to track them? Well if you search on the internet, you will find various options like Alexa, StatCounter, etc but Google Analytics is the best option to go with.
To track your blog traffic, sign up for Google Analytics account and go to Dashboard > Traffic Sources > Overview
Here you will find all your traffic sources with complete details like, which search engine is bringing maximum traffic and for what post, which blog/website is referring you maximum traffic, etc.
Apart from Google Analytics, Alexa also provides you a lot information about your visitors like from where they originate, in which age group they are etc.
See the below figure this gives me a complete information about my visitors, this demography is generated by Alexa based on my visitors/readership.
This is just a sneak peek there are a lot more option which you may use in Alexa.com to know briefly about your visitors.
These two sites Google Analytics and Alexa.com are sufficient for you to track your visitors and hence can help you to increase your performance, though there are a lot of other sites that provide you the same information.