You would have done well with this kind of thinking in the mid-80s when you needed to fit code and data into maybe 16k!
As long as you were happy to rewrite it in Z80 or 6502.
Another alternative is arithmetic encoding. For instance, if you only needed to store A-Z and space, you code those as 0-26, then multiply each char by 1, 27, 27^2, 26^3 etc, the add them.
To unpack them, divide by 27 repeatedly, the remainder each time is each character. It's simply covering numbers to base-27.
It wouldn't make much difference from using 5 bits per char for a short run, though, but could be efficient for longer strings, or if encoding a smaller set of characters.