To turn Santino into a contender all he would need to do is:
Smackdown, US title match, Antonio Cesaro Vs. Santino. Obviously everyone is expecting a quick match and a Cesaro win but after 3 minutes it becomes apparent that Santino is putting up a real fight. The match runs on to 7 minutes and ends with Santino kicking out of the neutralizer before hitting his 3 moves of doom (rope whip to splits, hip toss and cobra) and getting the win.
Cesaro rolls out of the ring quickly as Santino is presented the belt and takes mic. He proceeds to cut a promo sans accent about how he's sick of being comic relief, that he got into wrestling to win titles and he won't do as he's told anymore. Saninto Marella is no more.
The next week 'Santino' comes out to new music and in new ring gear, that isn't covered in Italian flags, and introduces himself under his 'real name' of Joe Basko. He defends his title against Cesaro with a more technical and more aggressive style than we're used to from him and debuts a new finisher, some Judo derivative throw or submission.
From there you could book him however you like; face, heel, long US title reign or straight into MitB or the main event picture. He was so good in the Elimination Chamber (which I've just realised is a euphemism for toilet!) and I've always liked Judo so it makes me sad to see him wasted. Time to change it up WWE let Ryder take the comedy crown and Santino can shine.