It's standard zip compression, which is the same as that built into XP and dozens of other tools.
What were you compressing? If it was video, no lossless compression format in existence will make much difference (if it would, the video compressor would already be doing that, after all). Photos, similar. If it's a folder full of text files, you should get a lot better ratio than that, but again, it's just standard zip compression--does what it does.
You can always try downloading Stuffit and see if it does better with your files--the newest version uses a relatively advanced scheme.