The best way to get your head around website optimization is to open a Google analytics (free) account and check out the bounce rate of your site visitors. You can even run multiple experiments simultaneously. To Learn more about website optimization, check out google, Think 2010.
The idea is to make changes, small ones, to your site and use Google website optimizer to run the tests (similar to A/B testing). Split tests, modifications in content, different color schemes, and variations of numerous other elements can all have a measurable impact.
What if you could find the magic words and images that entice visitors to stay and become customers? You can, by testing variations of your website pages.
Website Optimizer runs the test
Website Optimizer works in the background, dividing visitors into groups and presenting each group with a unique page variation.
Website Optimizer presents the results
Easy-to-read reports show you which variation is most effective at producing the outcome you're looking for.
The drawback is that for smaller sites that don't have a lot of traffic the tests take longer to run.
Yes. This is time consuming, pain staking, and highly profitable. It is a great way to transition from old stuff to new stuff.
Think about your product page -- placement of the 'add to cart' button and the location of product recommendations or cross-sell items. Is your 'buy flow' optimized for maximizing sales?
Get the latest testing strategies, plus product and industry news: Visit the official Website Optimizer blog
An excellent book or guide about website optimizer is, "Always be testing", by Bryan Eisenberg and John Quarto-vonTivadar.
Here is a two part video interview with Bryan dissecting Lands End. How to Improve a Product Page, part 1 - Bryan Eisenberg (7:23).