It takes talent, marketability and a good bit of luck to get signed. Even then, you are not guaranteed fame and success. Here are a few tips to getting your band noticed, and hopefully signed, by a record label.

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[edit] Steps

Make good music that is well written and can be marketed.
If you need to replace a member do it before you cut the demo. It will save you legal hassles later.
Practice regularly. It isn't just about sending out packages, you also need to be well rehearsed.
Save your money. There are hard cost associated with making demos and getting noticed.
Start booking shows locally.
Market your shows on Myspace, local music stores, with other bands and have everyone bring all their friends. It's more than just playing a gig. You have to develop a following.
Start looking around for an experienced manager to help you get started. An experienced manager will probably not be your best friend, your dad, your guitar teacher but someone who understands the ins and outs of the industry. This person may also be able to help you secure an entertainment attorney when the time comes.
Develop a local following and then branch out into more regional shows. Market these shows in the same way.
Develop the songs on stage and use the audience to gauge what works and what doesn't. It will be a good representation of how others perceive your sound. Your favorite song may flop with the crowd.
Record an amazing sounding demo with a great producer and pay to have a professional label made with your contact information. Don't send covers but send your best sounding original music.
Print multiple copies and set some aside for selling at shows.
Go to the gym. Image is everything especially if you want to be noticed by the majors. You want as many things to work in your favor and this includes having an interesting look for the band.
Avoid drugs. Word travels and artists with drug problems usually cost more money than artists without issues. Labels want a good return on their investment these days, not headaches.
Coordinate the style of everyone in the group.
Arrange a wardrobe for shows that make your group look like a marketable group.
Get professional photos made and video if you can
Make a press pack which consists of a photo, your demo (printed) a biography of the group and interesting info about the members, press clippings, photos of live shows.
Find the address of any record label your music would feel home with and send them a press pack (make sure they accept unsolicited demos).
Playing shows isn't a guarantee but exposure is never a bad thing. You could possibly be signed without ever playing a show but chances are slim. Additionally, having some popularity will help you negotiate a better deal with a label when you are signed.
Sign up for websites like lp33.tv, unsigned.com and unsignedbandweb.com. These websites will give you access to fans as well as talent scouts.

[edit]JSC ENTERTAINMENT'S Tips

Be marketable. Spend time thinking and working with your image as well as your sound.
Having a band is much like being an owner of a business. You sometimes need to cut dead weight to bring in someone to help you move forward.
Call local festivals and find out who you might be able to open for.
Sign up for band contest sponsored by local radio stations or concert halls
Have someone video your shows and ask about having them played on public access TV shows.
Never sign away your rights to the master recordings!
Some people are just not photographic or video well. Accept if you're one of these people. Experiment with your look, and find out what you need to do in order to look better on film.
Look Polished!
Try not to look like you just walked out of the crowd and climbed on stage. Spend time and money on your look. It's not selling out, it's investing.
Be smart with your set list. Play your best song last. End on a bang! Do this at every show. Never leave your best song out because you are sick of it.

[edit] Warnings

If you don't get signed, don't be too discouraged. Record a demo cd and send it around, or do it independently for a while. If your fan base is big enough, people will have to listen.
Don't sign contracts without careful consideration and legal advice.