The Blues were eliminated in the round of 16 by eventual winners Bayern Munich last term.
But Lampard believes they have a better squad and have learned from their humbling at Bayern's hands last season.
He told the club's website after a 4-0 away win against Sevilla: "I'm pleased with where we're at. The levels will obviously go up in the next stage, which we've thankfully qualified for and we've topped the group at this early stage. So that's great for our confidence but the levels will go up, the competition goes up, we found that out last year.
"But we're in a different place now. We are improving. I felt that and I'll never be one to get carried away, but I knew at the start of the season, with the new players having some time to bed in, the younger players to mature. We're seeing that in the younger players, the maturity of their levels.
"The young players are reacting to competition and experienced players are affecting things and reacting to competition. Look at Oli today, but you could look around at other performances within that team, with Jorginho, Rudiger, Azpilicueta and others.
"We have to keep improving because at this stage now things will get tougher game by game as we go through. What I'm pleased with is we are in a position where we are gaining confidence so that we feel we can take on any opponent. That's the progression that we're in, today was another step for us."