When do grades matter and how much?

As tortoiserun said, it's really really hard to get a C at most b-schools. The majority of people will get B's (or whatever equivalent). To get an A, it's really a matter of putting in the extra effort.

The academics in b-school for the most part doesn't have the intellectual rigor compared to other academic programs. What makes the academics "hard" in bschool is really the volume of info that you have to digest, and not the actual difficulty of the material itself. So that's why getting an "A" in most classes is really a matter of effort more than anything else.

And while consulting firms and banks will ask for GMAT scores (depends on the school, the firm, the economic cycle, etc.) it's still pretty low on the totem pole of what they really look for.

The biggest difference with MBA recruiting compared to so many other professional/masters programs is that MBA students have years of full-time work experience. And recruiters value that more than grades - even if your prior experience may be unrelated to the job you're interviewing for. As you know, a big part of whether you can do well in a job is whether you can fit into the organization's culture, and that kind of "office savvy" comes with working full-time regardless of what industry you're in - call it street smarts if you will.

That's why don't get too caught up in trying to get top grades for the sake of recruiting. If you do decide to do it, do it for its own sake. Just know that given the volume of work being thrown at you, it's really about time commitment, and you'll be doing it at the expense of other invaluable aspects of the b-school experience (i.e. networking, getting to know your classmates outside of the classroom, group activities, extracurriculars, industry events, guest speaker series, etc. and more generally enjoying the 2 years you're spending away from work).