Step 1: Supplies
I bought a few Santa hats from the Dollar Store to experiment. I searched for hats with the least-fluffy fur.
I bought a few sets of letters from the local craft store. Solid letters, about 1mm thick (1/16"), worked best for me.
The self-stick adhesive on the letters has held up for light use; I anticipate that hot glue might be required if the letters start falling off.
Step 2: Assembly
Align the fur the way you want it.
Start attaching letters in the center first, then work outward.
Step 3: Finish
Add bling (such as decorative eyeglasses).
Your hat is now ready for the Santacon or the Playa.