Saturday's 2-1 FA Cup final defeat to Chelsea denied the Reds the chance of a domestic cup double and effectively ended their season with two games remaining.
But of greater concern has been the club's league form, particularly since the turn of the year when they have won just four and lost 10 of 17 Barclays Premier League matches in 2012.
A return of 15 points from a possible 51 sees Kenny Dalglish's side face the prospect of possibly finishing outside the top 10.
Two months ago had Liverpool beaten Arsenal at home and not lost in injury time they would have moved within four points of the Gunners with a match in hand.
Instead they are now 18 points behind Arsene Wenger's team and their prospects of making a bid for Champions League qualification next season seem further away than they were at the start of the current campaign.
"We need to dust ourselves down and we need to respond to the challenge next year," said Gerrard.
"We need to come back. Football is about highs and lows, it's certainly been a low today [Saturday].
"We've been fantastic in the cup competitions this year and the players deserve a lot of credit for that.
"We haven't been good enough in the league this year and we deserve criticism and we need to take criticism like men.
"We need to do better. We're Liverpool Football Club; we're not seventh or eighth in the league. We're better than that."
Despite a poor start to Saturday's Wembley final, going 2-0 down to goals by Ramires and Didier Drogba in just less than an hour, Liverpool dragged themselves back into the game in the final 30 minutes.
That was mainly due to the arrival of substitute Andy Carroll who scored one and had a late header clawed away by goalkeeper Petr Cech, with television replays inconclusive as to whether the ball had crossed the line.
Gerrard felt they deserved more than they got out of that last-ditch charge but admitted they should have done more to make the match a contest earlier.
"I think on our second half performance we certainly deserved to take Chelsea to extra-time," the England midfielder told liverpoolfc.tv.
"But I don't think we did enough over the 90 minutes to deserve to win the game.
"I think, given the pressure we put them under second half, we're a bit disappointed we didn't get extra-time out of it.
"That's the frustration. Looking back, we never got going until 30 minutes into the game and I think we got even better once Andy came on and we finished the game a lot stronger than Chelsea.
"That's why I believe we just did enough to get a draw out of the game. I wouldn't say we did enough to win the game."
The debate over whether Carroll's header crossed the line is still rumbling on now and Gerrard accepted it was tough call for the assistant referee.
"It's difficult for the officials," said the 31-year-old.
"Obviously from a biased point of view, we've got an argument with the computer image but the officials have got an impossible task when it's so close and until technology comes in, then with decisions like that, you can't really put a big argument forward.
"It's one of those things: Chelsea got a bit of luck against Tottenham in the semi (when they had a goal awarded despite the ball appearing not to cross the line).
"They got a bit of luck again yesterday [Saturday]. Maybe this was their year."