I dont think keyword density could be the reason, many more factors that they look at. If you lost your usual rankings, check if you lose important backlinks a little while back.
Do the changes that you believe were needed and wait to see if it makes a difference. You wont know whether the changes you are making are having a positive impact until you actually wait.
Depends what backlink types you are after. It is either a lot of work for yourself to complete or outsourcing it which could take an investment from end.
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