I'm not sure if the original request was for 7-bit compression or whether it's for text strings, which theoretically use values 32-127. If the latter, you can take six values ranging from 1-96 and compress them into a five byte 'chunk' since:

 96^6 =   782,757,789,696
256^5 = 1,099,511,627,776
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However, there my be better compression rates available depending on what you know about the data ahead of time. I know I spent a happy two or three weeks researching this (in the late 80's, using Borland's Turbo C) -- it's a very neat area to research.

One more thought -- if you've got a large enough sample size, you can start to encode pairs ('en', 't ') or triplets ('en ', 'e, '). It's fun stuff.