I have been told that if I do site tracking and analysis, it would help me. is it, how would it help to achieve better rankings? Because with analytic tools, I just create traffic reports for client.
Vaishali, making reports alone will not make any difference in your rankings. However, if you are able to tell what you should improve, you will be able to make such changes that will help your website.
Site Tracking and Analysis should also consist of analyzing your COMPETITION, backlink info, keyword search volume, etc.. Looking at the traffic details wouldn't be enough. I highly recommend SEOElite for a comprehensive site analysis. It's a powerful tool!
Web traffic analysis is VERY important. You can learn a LOT from it. You can see whether you are getting more traffic over time, whether people are viewing more or fewer pages on your site with each visit, which pages on your site are bringing you traffic from search engines and for which keyword phrases, which pages on your site are bringing you traffic from non-search engines, which sites are sending you the most traffic, how to tweek your on-page optimizations to increase SEO traffic, etc. If you're smart you'll figure out how to use to to also track conversions, figure out which traffic converts the best, which ads convert the best, etc. Any SEO/SEM that does not use web traffic analysis as a tool in their bad is totally missing the boat.