I would have a long conversation with my affiliate manager. Perhaps he/she might see a reason for not converting and offer some solutions for you. If the AM is not up to discuss it I would drop the program.
Do you have a custom landing page? If so, is it effective? It sure doesn't look like it.
Perhaps sending the traffic to a new landing page or promotion will help?
What are you selling the visitor? A free chip will gain tons of sign ups but a low conversion ratio. Still looks a bit low even for a free chip offer.
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"People who are unable to motivate themselves must be content with mediocrity." ~Andrew Carnegie~