Let us assume for the moment that you have a better than average guild, and your guild is this good because of how you work together, not just due to a few workhorse players. Even though you and your friends may not be the best players in the game, the way you go about playing, raiding, etc. gets you to your goals much better than those idiots you meet in pickup groups.
This might be because you engage in cooperative alt creation and leveling, have a high degree of trust in awarding loot, maintain a consistent schedule, enforce strict requirements upon guild members, or what have you. You have found What Works, or at least what works for you. What happens when you let more people into the guild?