A 20-15 defeat at Bath ensured the pool stage would end in frustrating fashion for the Warriors, as a pair of second-half penalty tries swung the contest in the home side's favour.
With Toulouse losing at Montpellier, victory would have seen the GUINNESS PRO12 high-flyers top the pool and progress to the last eight.
However, focus now switches back to league action, with Glasgow seeking to continue their play-off push at Zebre on Sunday February 15.
And Townsend believes that despite its disappointing finish, this season's European adventure can serve the Warriors well for the rest of the campaign.
"There were only a couple of inches in it," he said. "We came very close to scoring a try at the end, but Finn [Russell] and Sean [Maitland] were just stopped on the line.
"That would have given us an opportunity to kick the conversion and go through. Finding out afterwards that Montpellier also won was maybe a bit of salt in the wound.
"But I was really proud of the players' efforts. I think we showed a lot of character in how we aspire to play the game and take on opposition with ball in hand.
"It went to the wire. We have come close against top sides such as Toulouse, Montpellier and Bath and have a good picture of the side we are.
"We had close games against Toulouse and good wins over Montpellier. We were not perfect (against Bath) and to win these big games you need to be as accurate as possible, but there is a lot of improvement to come from this team."
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