Spurs slipped to a 3-1 loss at home to Benfica in the first leg of their Europa League last-16 tie, while Arsenal bowed out of the UEFA Champions League after a 1-1 draw away to Bayern Munich condemned them to a 3-1 aggregate defeat.
The capital rivals lock horns at White Hart Lane this weekend, with Vertonghen acknowledging that Tottenham must improve considerably if they are to keep their hopes of a top-four finish alive.
"Every game gets bigger and bigger if we keep losing," said the Belgian in the London Evening Standard.
"The north London derby is a massive game at the moment. We both need a win on Sunday so one team will be very disappointed.
"There is no reason not to be motivated but we have to play better and we all want to do that. Sometimes we look good but other days we are not good enough."
Christian Eriksen provided the only bright moment on a bleak night for Tottenham against Benfica with a wonderful free-kick, and still believes they can make it through to the quarter-finals.
"We have the players for it so of course we will try and go through but we know it will be very difficult," said the Denmark midfielder, who is also relishing the prospect of facing Arsenal.
"I have only been here for a few months but I know what the north London derby means to both teams and I am really looking forward to it.
"It will give everyone a huge boost so hopefully we will be way better than last night."
The great sport keeps coming during Magnificent March. Here are some of the highlights you can enjoy with Sky Sports.