At the shop I work at, we use the phrase, "You can polish a turd, but at the end of the day, it's still a turd."

When translated properly to the consumer, this can result in the purchase of a new bike, or at the very least, you not having to waste time working on their awful rustbucket. We try to encourage upgrading via allowing the customer a test ride a new bike. First hand experience as to the difference in ride quality, often speaks louder than words. However, in the cases where the customer simply can't afford the price jump in going from their department store brand-x to something in our shop, we usually find that they're better served by simply buying a new brand-x, rather than paying us to try and "tune" their old one. Although turning away service seems counter-intuitive (and you'll run the risk of being labeled an elitist bike snob), you'll no doubt end up saving lots of time that can be better applied to servicing bikes of at least passable quality.