Liverpool lost out at the Bernabeu despite ringing the changes from the side that lost at Newcastle at the weekend.
Gerrard, Sterling, Coutinho and Balotelli were all named on the bench - possibly with one eye on the Chelsea game or possibly with one eye on the fact that the so-called 'first team' have been playing so badly in recent months.
Can and Lucas were named in midfield, with Borini selected up front.
The reds enjoyed a decent level of possession but without creating too many clear cut chances. Mignolet produced a host of saves to keep the score respectable on a night which saw the European Champions seal qualification and leave Liverpool in need of two wins in the final two group games.
From the start Liverpool's passing was crisper - despite the fears ahead of the game the reds were happy to play short balls to try and build up play. Borini was working tirelessly to get involved in the game. Despite the personnel changes, Rodgers continued with the one man up front strategy. Markovic was in place to try and join in attacks but was also heavily involved in providing defensive cover down the right wing. Ronaldo, Marcelo and Benzema giving the LFC defence plenty to think about.
But barring an early mistake by Skrtel that required Mignolet to save from a Ronaldo shot - the reds defence was holding up well. Kolo Toure had one of his best games in a Liverpool shirt.
Lucas Leiva and Emre Can appeared to quickly form a good partnership and broke up Madrid's play on a number of occasions.
Liverpool's full backs had some of the ball in Madrid's half but hesitancy, and perhaps lack of confidence prevented the reds going for the attacking option a number of times.
Benzema's goal arrived midway through the first half - a fine finish even if the game had been fairly even up to that point. But unlike at Anfield the reds didn't buckle and gave an improved if unremarkable performance.
Gerrard, Sterling and Coutinho were sent on late in the match but their arrival had little effect.
Basel beat Ludogorets in Switzerland, which means Liverpool now effectively have to win both of their final games to qualify - Ludogorets away and FC Basel at Anfield.