As far as paying instructors more goes: There is a financial point at which the students will not go beyond. I would love to be paid more per hour, but as soon as it looks likely that a pay rise could be accomodated, up go the landing fees or fuel price, so bang goes the pay rise. We provide hundreds of trial lessons each year and many would love to continue with learning if only flying wasnt so expensive in this country.
With regards to marketing: If anyone knows what the magic formula is, then share it with the rest of us. I agree that most clubs/schools are not proactive enough and are willing to waste money on printed ads that do nothing more than get a few trial lessons. (which make very little money). Most people that learn to fly have made the decision years before they start. How do we encourage others to start and to part with huge sums of money? Only when we can achieve that can we think about paying instructors more.