What's the best way to tell a customer that their website is terrible, not serving its purpose or promoting them in the best light?
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I always try to start any website update or creation conversation with identifying the goal(s) of the site.
Is it for marketing? Lead generation? FAQ? Ecommerce? A mixture of different things?
From there, evaluate and step back and discuss whether the website supports those goals well. That way you are discussing objective goals and avoid subjective "I like it", "well, I don't" conversations.
In addition, it's worth considering that an "ugly" site that a customer is unhappy with may serve goals quite well, while "pretty" sites that make the customer happy may sit there and do nothing at all.