Take them to a tournament and let them get absolutely annihilated. Half of them will be like "**** that," but the other half will be like "I HAVE TO ****ING IMPROVE." From my own experience with new players, trying to coddle them just doesn't work. The people who are giong to quit are going to quit no matter how long you delay them going to a tournament. No one that plays this game goes into every match 100% prepared, so if they don't like going into tournament unprepared, they'll never be interested in improving to attend more tournaments.
Some more specific tips I would give is to keep a healthy variety of characters in your scene. Yeah, spacies are fun, but if you and the second best guy in your scene only use spacies 24/7, obviously they will feel pressured to switch to them as well. Even for the guys with low tiers, just let them play low tiers until they get good enough at the basics that they can decide on their own if they want to change it up, and even then I would just recommend that they play one top tier along with their original main.
Also, depending on how good they are, don't force too much stuff on them at once. Giving them tips is fine, but you don't want to be overwhelming them with all of Melee's options in any given situation because they won't know where to start. Instead of telling them what Mango would have done or listing a million different situations they need to be prepared for in a matchup, just let them play and figure out the basics, and just occasionally correct super bad habits that are completely limiting them. The most common example is rolling. If they just shield and roll all game while you run over them, they aren't learning and they aren't having fun. It's things like that where you need to take a second after the match to say "Yeah, you shield a little too much. You should try to avoid attacks by moving instead. You may get hit a lot when you stop trying to shield all the time, but you'll also be able to get more hits yourself."