The Reds were top of the Premier League table until recently but a lack of form and ability to score goals has seen them drop to fourth - and now exit the cup in the fourth round, losing 3-2 at Old Trafford.
“It’s not what we wanted, so it’s frustrating. If you want to win tonight, you have to play at your absolute top. We weren’t on our absolute top, but we made a lot of steps in the right direction,” Klopp told reporters.
"The start of the game was good, but then we made decisive mistakes.
“There were obvious mistakes around the goals: the first, protecting, the second, a mishit of the ball and the third, your [reporter] colleagues told me now it was not a foul.”
Despite the defeat, Klopp saw evidence of improvements compared to recent fixtures and feels the match might have set a platform for the upcoming crucial midweek game against Tottenham, who are just one place behind Liverpool in the Premier League table.
"We can take positives out of this game, of course – I saw a lot of steps in the right direction and that’s all good.
"It was good preparation for the Tottenham game with their counter-attacking threat. We know exactly what we have to work on. If you are in a situation you don’t like, you want to get out of it. We want to get out of it and for that we have to make steps.
“Tonight we made these steps – not the final ones, but we made steps and that’s for the moment OK.”