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As to your qustion, two things immediately come to mind, one that not that many people search for that keyword, the other is that they do search for it a lot but in 2 or 3 word search phrases which your site does not appear for.
For example if I planned to visit the town of Widget, I would be unlikely to search for 'Widget' - I would be more likely to search for "interesting things to see in Widget" "hotels in widget" or "maps of widget" and would get very different results.
For example, I have a term that, depending on Googles mood at the moment, is #1 out of anywhere from 3,500,000 to 26,000,000 results. I get about 8 visits a day from that term.
So what to do? Dig through you log files or the referer list in yourstats and see what terms are the most popular, optimize more for those.
But especially look for terms/phrases that people are finding your site with that you had not thought of.
If you find a term phrase like that which is getting more than one entry referal per day build a page optimized for it. You might have to do a little research to build that page, but it's well worth the effort if you can make it fit with the theme of your site.