If the dog is matted, you may not have any other choice but to shave him. That said, you CAN make it a positive customer service situation even if the dog won't look fantastic.
It's important to act confident and knowledgable, as well as understanding. I don't shame owners. I am matter of fact about the dog's condition and I tend to lean on the side of the dog will be shaved rather than I'll try to save it. I would rather they get a happy surprise than to have their hopes up for a miracle and then be disappointed.
"Well, this time, it looks like we will need to go short and start over. The good news is that it's hair and it will grow back. :) From here, we can set up regular appointments and make sure he doesn't get matted up again. At this age, they sure do seem to matt up really easily. It's usually because they are changing from that soft puppy coat into their adult coat. It can be realy tough to keep it up. By starting over, we can work on a trim style that suits him best and one that you can more easily maintain."
From there, if the client does appear to really want to keep the coat maintained, I will try to save some. If you're lucky, the dog will look more schnauzer like and you can do a schnauzer trim. Often times the worst matting is in the armpit and rear areas. Both of those are taken care of with this trim style. The whole underside can be clipped off with just a thin skirt hiding it.
I think the most important thing is to not promise a miracle. It will only disappoint if you can't pull it off. I prepare them for naked and do my best to wow them at pick up with something cute instead.