I understand that the political culture back then was a lot different to what it is now and that it wasn't unusual for leaders of political parties to remain in their positions after election losses, but it does surprise me the Heath managed to remain as Leader after getting pretty hammered in the 1966 election.
It is my understanding that Heath was unpopular with many of his MPs due to his social ineptitude, his difficulty with women, his status as a bachelor, his inability to adapt to television, etc. I figured this would only increase the chances of him being ousted.
I don't think you're going to get much luck with an answer from someone familiar with British political history sadly - questions about British electoral history tend to languish here - but electoral history in general is a great hobby of mine, so I'm going to step in with a very interesting primary source to try and offer some insight.
You might find these couple of bits of video from election night in 1966 interesting. In this one, a defeated Conservative Member of Parliament who played a big part in the move to an elected leader interesting rejects the notion that there needs to be a change in leadership; another makes a similar argument in this video. In both, the interviewer's line of questioning seems to strongly imply that there was a perception at this point that the only alternative to Ted Heath was Enoch Powell. Though Powell hadn't yet risen to the notoriety he has today for his Rivers of Blood speech, it would seem that by 1966 Heath had entrenched himself fairly well as the voice of the moderate centre or left of the party in opposition to some of the more radical notions of conservatism emerging at the time, and was thus seen as the best prospect for winning an election again despite the defeat.
This piece of analysis from the end of the election night coverage notes that the public mood in the country had overwhelmingly favoured Labour in any event; Labour had been leading in the polls (some of which, it is mentioned elsewhere in the video, had anticipated a much bigger majority) and the commentator suggests the only thing preventing an outright Labour win in 1964 had been a lack of trust in Labour after the party being out of power for so long; he also remarks that Heath had actually improved his standing by fighting a good campaign in '66 against the odds. To quote the video: "almost from the moment Labour came into office, then the unknown is then known, was accepted, and what you are now getting is what would otherwise have happened in fact in 1964 [...] Mr. Heath, to reverse that, would have needed a miracle, and miracles are no longer fashionable in politics" (also stay tuned for an amazingly sexist piece of broadcasting at the end!).
Keep in mind also that Heath was the party's first elected leader, having only been in office for eight months, and there was not yet a culture of democratic accountability in the same way at the top of the party as a result. In any event, he had gone into what was an unwinnable election for the Conservatives and managed to hold Labour's gains to significantly below the big landslide polls (and earlier election night projections) had anticipated. And judging by the mood of Conservative MPs and the questioning of the BBC, there wasn't a viable alternative to Heath from his own wing of the party.